DAX clearly in the red: nervousness on the stock exchange is increasing

market report

Status: 01/31/2023 12:46 p.m

Before the upcoming interest rate decisions by the central banks, only a few investors dare to buy on the stock market. After a robust start to trading, the DAX is now tumbling back towards the 15,000 point mark.

The psychologically important one thousand mark is again the lynchpin in the German stock market at noon. At 15,010 points, the DAX is only slightly below that and has increased its losses to 0.8 percent.

increased insecurity

“The volatility picks up again before the central bank decisions and illustrates the increased uncertainty in the market,” said market expert Salah-Eddine Bouhmidi from broker IG. Investors were infected by the euphoria on the stock market at the beginning of the year and now fear statements from the currency watchdogs about a continuation of the aggressive, restrictive monetary policy.

Experts expect the US Federal Reserve (Fed) to hike interest rates by 25 basis points on Wednesday. The European Central Bank (ECB) and the Bank of England are each expecting interest rate hikes of 50 basis points on Thursday.

Wall Street is not playing along

After weak indications from the US stock exchanges in the evening and the Asian markets, no tailwind for the stock markets from New York is to be expected in the afternoon either. The US indices are likely to start trading weaker again in the afternoon after significant losses the previous day, which is currently being indicated by US futures.

US reporting season with more balance sheets

Many investors also want to wait for the latest balance sheets from major US corporations, which will be available later in the day. US heavyweights such as General Motors, Pfizer and McDonald’s are presenting their business figures for the fourth quarter and the full year 2022.

Retail trade in Germany is weakening

Current data from Germany shows a clear reluctance to buy among consumers. The German retail trade turned over less last year than in 2021. Price-adjusted sales were 0.6 percent below the previous year’s value, as reported by the Federal Statistical Office. German retailers are preparing for difficult business this year due to high inflation. Sales are likely to grow by two percent, the German Retail Association (HDE) predicted in Berlin on Tuesdayadjusted for inflation (real) but decrease by three percent.

Nevertheless, Germany could avoid a recession in the current year, according to the current forecast of the International Monetary Fund (IMF). According to this, economic output in Germany will grow by 0.1 percent. So far, the IMF had expected a minus of 0.3 percent.

Euro slightly in reverse

At $1.0805, the euro is currently at the lower end of the trading range of the past few days. On the foreign exchange market, too, market participants are eagerly awaiting the decisions of the central banks in the coming days.

Strong dollar depresses oil prices

A barrel of North Sea Brent costs $84.44, half a percent less than yesterday. The appreciation of the dollar has recently put pressure on the oil market. A stronger US currency often has a negative impact on oil demand as the commodity is mostly traded in dollars. If the dollar rises, crude oil becomes more expensive for investors from other currency areas, which often weighs on their demand.

Vonovia stops construction projects

In the DAX, the focus is on the share of the real estate giant Vonovia. The group pulls the ripcord because of the rising construction costs and interest rates and stops all new construction projects planned for 2023. “We will not have any new construction projects starting this year. Inflation and interest rates have risen enormously and we cannot close our eyes to that,” Vonovia CEO Daniel Riedl told the “Westdeutsche Allgemeine Zeitung”. Plans in Berlin and Dresden are particularly affected.

Does VW build batteries in Canada?

According to a newspaper report, Volkswagen is looking at the Canadian province of Ontario when looking for a location for the first battery cell factory in North America. The province offered to support the project with investments and other incentives, the “Handelsblatt” quoted from documents that the newspaper evaluated. Ontario wants to be “competitive with other locations under consideration”. A Volkswagen spokesman declined to comment on the report.

FMC at the end of the DAX

Stocks from the European pharmaceutical and healthcare sector are mostly falling today. With a discount of around two, papers from the dialysis specialist FMC are among the biggest losers in the DAX. The investment bank Warburg Research remains pessimistic before the publication of the annual figures for the dialysis provider and continues to recommend selling. The headwind is not only likely to continue in 2023, but to become even stronger, says analyst Christian Ehmann in a recent study.

Rheinmetall issues convertible bond

After the soaring of the past few weeks, the shares of the armaments group from the MDAX loses around seven percent in the morning. Rheinmetall raises one billion euros in fresh capital to finance the takeover of the Spanish ammunition manufacturer Expal Systems. The company plans to sell two tranches of unsecured convertible bonds, each with a volume of EUR 500 million, to large investors today. The securities have maturities of five and seven years and can be converted into up to 3.14 million Rheinmetall shares. This corresponds to a good seven percent of Rheinmetall’s share capital.

Atoss gets more orders

The HR software specialist continues to benefit from the shortage of skilled workers and the demand for cloud software. Last year, incoming orders for subscription programs rose by more than 40 percent to EUR 36.5 million. The board of directors of the SDAX company spoke of a “very pleasing order situation”. In 2022, sales had grown by a total of 17 percent to 113.9 million euros, and the company had also exceeded its own targets in terms of profitability with a profit margin before interest and taxes of 27 percent.

EnBW wants to double wind power generation

The German energy supplier EnBW intends to decide on investments in the large He Dreiht offshore wind farm in the North Sea in the first quarter of this year. With an output of around 900 megawatts (MW) when it goes into operation in 2025, the current energy generation from wind power at sea would almost double for the Karlsruhe group, said Georg Stamatelopoulos, CEO, who is responsible for sustainable generation infrastructure, the dpa news agency. The first supply contracts, for example for the turbines, have already been concluded. The authorities still have to approve the construction, only then will the decision be made.

Unicredit benefits from the turnaround in interest rates

The turnaround in interest rates and cost reductions helped the major Italian bank Unicredit achieve its best result in over a decade last year. According to the bank, net profit increased by almost 48 percent to 5.2 billion euros in 2022. Investors should benefit from this through dividends and share buybacks totaling EUR 5.25 billion. The turnaround in interest rates caused Unicredit’s net interest income to grow by 18.6 percent to EUR 10.7 billion in 2022. Overall, group income grew by 7.3 percent to almost 9.1 billion euros.

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