market report
Status: 06.01.2023 10:24 p.m
Fresh economic data has brought much relief to Wall Street. The Nasdaq technology exchange, which is particularly sensitive to interest rates, made up ground. The DAX also shone again.
Trading in New York was characterized by a rather rare picture, at least this week, because all the major indices ended trading with significant gains. It was a conciliatory end to what had otherwise been a very mixed week for the US stock markets.
It was triggered by a solid jobs report which, as wage pressure eased, pushed the interest rate concerns that had dominated Wall Street investors’ minds of late today into the background. Hopes for a slower rate of interest were fueled by weaker-than-expected order data from US industry.
Declining interest rate fears also weighed on the US dollar, while the euro rose by 1.2 percent to $1.0646 after a changeable course of trading. At the daily low, the common currency had even fallen just below the $1.05 mark in the morning.
The Dow Jones index closed the day at 33,630 points, up 2.13 percent. The index of the Nasdaq technology exchange ended up being 2.56 percent higher at 10,569 points. The market-wide S&P 500 index also rose sharply by 2.28 percent to 3895 points.
Nonetheless, worries about inflation have not completely disappeared, warned Commerzbank strategist Christoph Balz. “The US job market continues to lose momentum, but the pace remains high.”
In addition, the business of US service providers shrank surprisingly for the first time in over two and a half years. The purchasing managers’ index fell to 49.6 in December from 56.5 in October.
In particular, service companies with a proximity to the real estate market are now very concerned about interest rate developments, explained NordLB analyst Tobias Basse. “A recession in the United States can probably still be avoided, but the central bank in Washington must now act much more cautiously in order not to push the US economy off a cliff.”
Hourly wages below expectations
the Data from the labor market were received positively overall, but an immediate end to the current strong interest rate cycle of the Fed cannot be inferred.
But there are bright spots. Above all, hourly wages, which are particularly inflationary, rose less significantly than expected in December. Average hourly wages rose 0.3 percent month-on-month, the US Department of Labor said before the US stock market opened in Washington. Economists had expected an average increase of 0.4 percent.
Overall, more jobs were created in December than expected. Nonfarm payrolls added 223,000 jobs last month, up from 256,000 in November. Economists surveyed had only expected 200,000 new jobs in December. The unemployment rate fell to 3.5 percent in December. This is the lowest unemployment rate since February 2020, before the Corona crisis triggered a significant increase in unemployment.
expert voices
“The labor market in the US remains robust and relatively tight. So far, there are no clear indications that the dynamic of job creation is slowing down any more significantly. The numbers are robust, but since wage pressure seems to be easing, interest rate expectations are unlikely to be boosted much.” , comments Ulrich Wortberg from Landesbank Hessen-Thüringen (Helaba).
“Despite all interest rate increases, the US labor market is doing well. The Fed has not been able to dampen the mood among US companies for hiring with its tightening of monetary policy. There was also robust job creation in December. The Fed will therefore continue with interest rate hikes,” said the chief economist Thomas Gitzel from VP Bank.
Tesla in focus again
On the corporate side, eyes were once again on the battered Tesla share, which approached the $100 mark with another price slide to $101.81 before picking up again with a rising overall market and even 2.47 in the end percent up at $113.06 to close. The last time the shares were listed below the $100 mark was in August 2020.
Investors are fleeing the shares because the electric car maker obviously has to accept ever higher price cuts in order to get rid of its vehicles in China. The group has to fend off increasingly strong domestic competition from providers such as BYD, Xpeng or Nio.
Peddling CureVac
Papers from vaccine developer CureVac rallied over 29 percent on the Nasdaq after a positive mRNA-based vaccine trial against flu and Covid-19. The federal government is also involved in the Tübingen company. The studies are to be continued. CureVac was considered a great beacon of hope in the fight against Covid, but then fell behind because the vaccine did not work as well as the preparations from competitors BioNTech and Moderna.
DAX and MDAX with a strong start to the new stock exchange year
The topic of the day today was the eagerly awaited new ones US labor market data, from which investors hoped for information about the further interest rate of the US Federal Reserve (Fed). It became apparent that the job market in the USA remains tense, but at least the pressure on wages seems to be easing somewhat. Somewhat weaker than expected inflation data from the eurozone also had a supportive effect. It took investors a while to process the US data, which at first glance was not easy to interpret, but then they grabbed it decisively.
DAX and MDAX in top form
The DAX, which has started the new year so well so far and was still in the red in the morning at a daily low of 14,388 points, rose sharply towards the end of the session. It followed a rising Wall Street and ended trading at 14,610 points, up 1.20 percent. In a weekly comparison, this results in a remarkable gain of 4.9 percent. A start to the year that leaves nothing to be desired.
The industry and export-heavy MDAX performed even better, shooting the bird with a weekly plus of 7.3 percent. Today, under the leadership of K+S (Kali und Salz) and Rheinmetall, it increased by 1.12 percent and closed at 26,970 points. The armaments supplier and automotive supplier Rheinmetall, which presented business figures today, is considered a potential successor to the industrial gases specialist Linde plc., who wants to leave the DAX.
Recently, the German market had developed better than Wall Street with its highly valued technology stocks, which react particularly sensitively when central banks turn interest rates in the fight against inflation. In Germany, on the other hand, cautious economic optimism has spread and is having a supportive effect.
Profits in the bond market
According to the US data, there were also significant gains on the bond market, where the yield on ten-year Bunds fell to 2.19 percent and has thus lost a good 40 basis points since the beginning of the week. Traders spoke of the strongest start to the year since 1977 (!) on the bond market.
Mixed economic signals from Europe
There were mixed signals for the stock market from the economic side. The inflation rate in the euro zone unexpectedly fell significantly at the end of the year due to a slackening surge in energy prices. In December, consumer prices climbed 9.2 percent year-on-year after 10.1 percent in November and 10.6 percent in October.
On the other hand, negative news comes from German industry: In November, 5.3 percent fewer new orders received than in October. “This means that the downturn in incoming orders has intensified,” explains Commerzbank economist Ralph Solveen.
Oil prices down
Oil prices turned more clearly into the red in late trading. They had already recorded significant declines on the first trading days of the new year. After reports of high numbers of corona infections in China, the prices fell more significantly. A barrel of North Sea Brent cost $78.08, 1.65 percent less than yesterday.
BaFin again sees deficiencies in Deutsche Börse subsidiaries
The financial supervisory authority has once again targeted subsidiaries of Deutsche Börse for deficiencies. The Federal Financial Supervisory Authority (BaFin) identified weaknesses in Clearstream Banking AG and Clearstream Holding AG. Deficiencies were also reported at the subsidiary Eurex Clearing AG.
Deutsche Post under pressure in the DAX
Deutsche Post shares were initially among the biggest losers in the DAX, but recovered over time. They ended up closing almost unchanged, lagging behind the overall market. Collective bargaining with the ver-di union for around 160,000 Post employees has begun at the DAX group. Ver.di demands 15 percent more wages with a term of twelve months.
Cosco’s entry into the Hamburg port terminal is getting closer
The controversial entry of the Chinese state shipping company Cosco at the container terminal in Tollerort in the port of Hamburg is about to be completed. In talks between the Hamburg port logistics group HHLA, the Federal Ministry of Economics and the Cosco subsidiary CSPL, concrete conditions for the participation had been agreed, HHLA announced. The last details still have to be clarified, but the transaction should be finalized “promptly”.
Mercedes-Benz is pushing ahead with its own e-charging network
Last night Mercedes-Benz announced its own network with 10,000 charging points worldwide by the end of the decade. The Stuttgart-based company wants to invest a single-digit billion amount. “We don’t want to watch and wait until it’s built, so we’re building a global fast charging network ourselves,” said Mercedes boss Ola Källenius.
WhatsApp wants to defy online blockades
WhatsApp wants to remain available to Internet users in countries like Iran despite lockdowns. The chat service belonging to the Facebook group Meta is introducing support for proxy servers that can be used to bypass such regional blockades. The option is said to be available worldwide with the latest app version.
Samsung with second consecutive slump in earnings
Weakening demand is accelerating the decline in earnings at Samsung Electronics. According to preliminary calculations, operating profit in the fourth quarter fell by 69 percent to 4.3 trillion won (3.2 billion euros), the world’s largest manufacturer of smartphones and memory chips announced. This is the lowest value in eight years.