Market report
Status: 07.01.2022 6:14 p.m.
At the end of the week, investors’ concerns about interest rates increased. In the USA in particular, a quick turnaround in interest rates is becoming more and more concrete. The prospect also weighed on the DAX.
The correction in the DAX that began in the middle of the week continues today in view of numerous negative factors for the market. The DAX lost 0.65 percent at the end and fell back below the 16,000 point mark at a closing level of 15,947 points.
The leading German index increased its losses, especially after the publication of the US labor market report for December, which fueled new interest rate and inflation fears. There were also concerns about rising oil prices, after reports of riots from Kazakhstan. The infection dynamics of the Omicron virus also remains extremely high, The federal and state governments have tightened the regulations today.
US unemployment rate back to pre-crisis level
The main topic in the afternoon, however, was the December data from the US labor market, which was inconsistent. With 199,000 newly created jobs, these were well below the analysts’ expectations, but at the same time the unemployment rate fell by 0.3 percentage points to 3.9 percent. It is back to the level it was before the crisis. In addition, wages rose by 0.6 instead of the expected 0.4 percent.
These numbers are unlikely to please the US Federal Reserve, said Thomas Gitzel, VP Bank’s chief economist. “The pace of job creation should be faster.” At the same time, the higher salaries increase the risk of one Wage-price spiral. Experts had expected about twice the number of new jobs in the USA in advance.
“Against the background of the lower unemployment rate and the strong wage increases, the Fed is likely to see confirmation of the decision to accelerate the repayment of bond purchases,” said Helaba’s economist Ralf Umlauf in a comment.
Tech stocks not in demand in New York
The major US indices are all falling against the background of current interest rate and inflation fears, but have left their daily lows behind and are currently recovering somewhat.
A tentative attempt by the Nasdaq technology exchange to countermovement after the bitter losses of the last two trading days initially quickly failed in early business. With a loss of over half a percent, the highly valued tech stocks also lose more than the standard stocks. Meanwhile, the leading index Dow Jones has even turned moderately into positive territory, while the market-wide S&P 500 index is struggling with its closing level.
In the middle of the week it had Minutes of the latest Fed meeting the interest rate expectations of market participants have driven up and share prices down. The market is now expecting the first rate hike for the March meeting. The Fed had long classified rising inflation rates as a “temporary phenomenon”, but recently had to abandon this assessment.
High inflation in the euro area
Concerns about interest rates and inflation are currently not confined to the United States. Because inflation in the euro zone is more persistent than expected, according to the ECB chief economist Philip Lane. The rate of inflation will fall this year, but remain above the long-term goal of the European Central Bank, Lane told Irish broadcaster RTE today.
In the medium term, the ECB is aiming for an inflation rate of 2.0 percent as the optimal value for the economy. Inflation in the euro area surprisingly rose to a record high in December. Goods and services cost an average of 5.0 percent more than a year earlier.
Unrest in Kazakhstan is fueling oil prices
The inflation scenario of the major western central banks will largely depend on whether the drastic rise in energy prices can be brought under control. However, it does not look like that, at least from a short-term perspective.
Rather, supply concerns initially drove oil prices higher at the end of the week. The price of the North Sea Brent climbed to a peak of 83 dollars a barrel, the highest level in more than six weeks. The US light oil type WTI also grew significantly. According to the US labor market data, prices have calmed down again but remained at a high level.
The riots in Kazakhstan fueled fears that oil production there could also be impaired, explains Commerzbank raw materials expert Carsten Fritsch. According to Fritsch, Kazakhstan produces almost 1.7 million barrels of crude oil per day, making it one of the larger producer countries within OPEC +. In addition to Kazakhstan, temporary production declines in Libya also fueled supply concerns, according to the expert.
Gold price below $ 1,800
Speculation on a tighter monetary policy is meanwhile putting the gold price under pressure. The price of the troy ounce of gold in the afternoon costs $ 1,792, which is something as much as the day before. This means that the yellow precious metal cannot recapture the $ 1,800 mark. Rising interest rates make gold less attractive as an asset class, as gold itself does not generate any interest or dividends.
The euro is gaining ground
The euro gained on Friday following the release of the US labor market report. In the late afternoon, the common currency costs $ 1.1353. In early trading, it was trading just below $ 1.13. The European Central Bank set the reference rate at 1.1298 (Thursday: 1.1315) dollars.
European foreign exchange trading was also dominated by US data and inflation data from the euro zone. According to Commerzbank analyst Christoph Weil, it will take until autumn for the inflation rate to fall back to the target of two percent set by the ECB. However, Commerzbank still firmly expects that the ECB will not raise key interest rates this year.
Bitcoin at three-month low
Bitcoin is still going downhill: The largest and oldest cyber currency is losing up to five percent to 40,959 dollars, marking its lowest level in more than three months. Ethereum also fell by almost nine percent to a three-month low of $ 3,129. “Bitcoin missed its way into 2022,” comments Craig Erlam from brokerage firm Oanda.
Infineon at the top of the DAX thanks to Samsung
In the DAX, the Infineon share was one of the winners. Papers from the semiconductor manufacturer were from a Jump in earnings at Samsung Electronics inspired. Samsung Electronics posted its highest operating profit in four years thanks to the high demand for memory chips.
Interest rate speculation is fueling bank stocks
Bank values increased across Europe. In the DAX, Deutsche Bank was able to buck the negative market trend and went out of trading as the winner of the day. Commerzbank, which is listed in the MDAX, also posted significant gains. The day before, papers from Goldman Sachs, Citigroup and JPMorgan had been in demand on Wall Street. The money houses are seen as natural beneficiaries of rising interest rates.
Deutsche Bank is sticking to its annual targets
Deutsche Bank continues to expect to achieve its profitability and efficiency targets for the current year. CFO James von Moltke told the Handelsblatt that he was “very confident” that the bank would meet the requirements it had set itself. “The target return of eight percent is our north star, the central orientation for the entire bank and the entire renovation.”
Chip crisis weighs on Mercedes sales
The global shortage of computer chips has put a damper on the Daimler car subsidiary Mercedes-Benz. Last year, 2.05 million vehicles were sold worldwide, five percent less than in the previous year, which was weak due to the corona, the carmaker announced today.
In the fourth quarter, sales of the brand with the star collapsed by almost a quarter. The demand is high in all segments and regions. “However, the industry-wide shortage of semiconductors slowed the delivery of new vehicles,” said the automaker.
For the first time in five years, Mercedes-Benz has lost the title of the world’s top-selling premium brand to BMW. Munich had already claimed first place in the traditional head-to-head race this week and announced a record number of their core brand of more than 2.2 million.
BMW’s CES car changes color
BMW presented a car at the CES technology fair in Las Vegasthat can change color. The electric vehicle, baptized with the model name iX, has a special casing that works in a similar way to the e-ink display of an e-book reader. This allows it to change between the colors white and dark gray. BMW spoke of a research and design project.
Ryanair gives up base in Frankfurt
Europe’s largest low-cost airline Ryanair gives up its base at Frankfurt Airport. The five aircraft still stationed there would be redistributed to cheaper airports on March 31 of this year, the Irish company said. The reason given by the company was the increased take-off and landing fees at Germany’s largest airport at the turn of the year. Passengers with tickets already booked would be notified in the coming days and refunded.
T-Mobile outlook does not like
On the corporate side, the shares of T-Mobile US are in focus in New York, with the price falling by almost six percent. The Telekom subsidiary again lured many customers in the US in the fourth quarter. However, investors reacted disappointed that T-Mobile US expects an industry-wide cooling of the recent strong influx of new customers in 2022.
“New York Times” takes over “The Athletic”
The US media group New York Times Company wants to strengthen its digital business with the purchase of the online sports magazine “The Athletic”. The publisher behind the traditional daily newspaper “New York Times” pays 550 million dollars in cash for the takeover. “The Athletic” was founded in 2016 and has so far followed a strict subscription model with a consistent payment barrier without advertisements.