DAX expected to be slightly up: high tension on the trading floor


market report

Status: 02/01/2023 07:26 a.m

The US Federal Reserve’s interest rate decision due tonight is keeping investors spellbound today. The fluctuations on the stock markets are likely to be relatively small by then. However, the DAX should start with profits.

At 15,150 points, the leading German index is expected to start trading according to pre-market indications. This corresponds to an increase of 0.2 percent compared to yesterday’s XETRA close. In the wake of firm US stock markets, the DAX had freed itself from the negative zone again in the afternoon.

Small rate hike expected

The US Federal Reserve (Fed) will probably slow down the pace of interest rate hikes again on the evening of German time. On average, economists expect central bankers to raise interest rates by 0.25 percentage points this Wednesday. The interest margin should thus rise to 4.50 to 4.75 percent. In December, the central bank had increased the key interest rate by 0.50 points.

Wall Street is growing significantly

Hopes of smaller rate hikes by the Fed gave Wall Street a boost last night. The Dow Jones index of standard values ​​closed 1.1 percent higher at 34,086 points on Tuesday. The tech-heavy Nasdaq advanced 1.7 percent to 11,584 points. The broad S&P 500 gained 1.5 percent to 4076 points. A surprisingly gentle rise in wages in the USA has also brightened investor sentiment. Labor costs rose just 1 percent in the fourth quarter.

Business results with course effects

The US reporting season continues to cause strong price movements for individual stocks. A quarterly result above market expectations pushed shares in the parcel service UPS. Papers from the largest US automaker General Motors also rose by eight percent after a record profit.

Asian stock markets undecided

In Asia, investors are waiting in the morning. The Japanese Nikkei index closed almost unchanged at 27,347 points. The broader Topix index fell 0.2 percent to 1,972 points. The Shanghai stock exchange was up 0.1 percent. The index of the most important companies in Shanghai and Shenzhen stagnated.

Euro well maintained

The interest rate decision in the evening should also cause swings on the foreign exchange market. The euro is holding up well this morning at $1.0871. In the event of a small interest rate hike in the USA, the European common currency could rise further, especially if the European Central Bank (ECB) for its part tomorrow raises the key interest rate in the euro zone more than the US central bank, namely by 0.5 percentage points.

Oil is getting a little more expensive

Crude oil is traded little changed in the morning. At $85.55, a barrel of North Sea Brent currently costs slightly more than yesterday. The market is currently focusing primarily on greater demand thanks to hoped-for greater growth in the global economy.

AMD defies weak PC demand

Yesterday evening, a number of large US corporations presented quarterly figures after the US stock market closed, which could also affect German trade. The slump in demand for PCs is causing problems for the chip giant AMD. However, AMD’s quarterly results were still better than expected. Revenue rose 16 percent to $5.6 billion in the fourth quarter of 2022, and earnings of $0.69 per share were two US cents above market expectations.

Amgen with less profit

At the US biotech group Amgen, profits in the final quarter fell by around 15 percent to USD 1.6 billion. Sales were practically flat at $6.8 billion. Higher product revenues were offset by lower other revenues from the collaboration with the US pharmaceutical company Eli Lilly in the production of Covid antibodies.

Snapchat deep in the red

The photo app Snapchat is still gaining new users – but the advertising business is not taking off. After stagnating sales in the past quarter, the developer company Snap expects a drop in revenue of between two and ten percent for the current quarter. Snap made a loss of about $288.5 million last quarter. The stock fell about 14 percent in after-hours trading.

Rheinmetall procures a billion

The German armaments group Rheinmetall has raised one billion euros in fresh capital to finance the takeover of the Spanish ammunition manufacturer Expal Systems. Yesterday, Rheinmetall sold two tranches of unsecured convertible bonds, each with a volume of 500 million euros, to large investors, this was announced in the evening. The placement pushed shares in the DAX candidate by around six percent.

Software AG with final sprint

Thanks to a recovery in business in the fourth quarter, Software AG grew significantly in 2022. For the full year, the company saw organic product sales increase 7% to €773.4 million and operating margin up 1.6 percentage points to 21.2%. However, due to the gloomy economic prospects, Software AG is saying goodbye to the previous margin targets for 2023. The operating margin is expected to be between 16 and 18 percent.

source site