market report
Status: 03/01/2022 07:44 a.m
Investors remain under the spell of the news about the Ukraine conflict: the leading German index is unlikely to quite maintain its yesterday’s level in the morning. A number of corporate results are also forthcoming.
With 14,390 points, the German stock exchange barometer is expected to start trading according to pre-market indications. This corresponds to a minus of 0.3 percent compared to yesterday’s XETRA close. The tension also remains high on the stock exchange floor in view of the news about the war in Ukraine.
Situation in Ukraine still dangerous
Russian troops continued their advance on the capital Kyiv and the country’s second largest city, Kharkiv, on Tuesday night. A Russian military convoy of tanks and other vehicles rolls towards Kyiv. The fighting also continued in other parts of the country.
Wall Street mixed
The specifications from the overseas stock exchanges are not too bad. Some investors also see an important glimmer of hope in the talks that have started between Russian and Ukrainian representatives, which should now be continued. The Dow Jones fell 0.5 percent on Monday to 33,893 points. The tech-heavy Nasdaq, meanwhile, advanced 0.4 percent to 13,751 points and the broad-based S&P 500 fell 0.3 percent to 4,373 points.
“The trading environment is very dynamic and we remain defensive as things could get a lot worse from here,” commented Peter Garnry, equity strategist at Saxo Bank. Bank stocks in particular lost ground on Wall Street. According to experts, the new sanctions could harm the lucrative Russian investment banking business of several US banks.
Asian stock markets confident
In Asia, prices mostly rose in the morning. The Japanese Nikkei index closed 1.2 percent higher at 26,845 points. The broader Topix index rose 1.1 percent to 1,907 points. The Shanghai stock exchange was up 0.3 percent. The index of major companies in Shanghai and Shenzhen gained 0.2 percent.
“Much of what is happening in the markets is of course overshadowed by the news about the negotiations between Ukraine and Russia, but the most important factors will be the reactions of governments and central banks in terms of policy positions,” said Kerry Craig, market strategist at JPMorgan in Sydney.
Euro stable, oil more expensive again
On the foreign exchange market, the euro has recovered slightly against the dollar. The common currency is trading at $1.1189, about half a cent higher than yesterday. Oil prices remain high today. The price of a barrel of North Sea Brent rose by around one percent to $99, pushing it back towards the $100 mark. A troy ounce of gold costs around 1906 dollars, hardly changed.
Industry sees further supply bottlenecks
Due to the Ukraine war, German industry sees further bottlenecks in raw materials and price increases in Germany. Industry President Siegfried Russwurm told the dpa that the situation was confusing. “Currently, delivery bottlenecks for raw materials and intermediate goods are increasing significantly after a few weeks of relaxation on the markets. The war in Ukraine is causing companies additional uncertainty when it comes to importing raw metals and metal-bearing materials.” According to Russwurm, major bottlenecks for critical raw materials are foreseeable, for example in the area of electromobility.
Hellofresh is growing significantly
A number of companies from the leading German indices are presenting business figures today. The food supplier Hellofresh already presented its figures for the past year in the morning. Despite the headwind from reopening restaurants, the meal box mail order company ended 2021 with a jump in sales. Last year, sales rose by a little more than 60 percent to almost six billion euros. Adjusted for special effects, earnings before interest, taxes, depreciation and amortization (adjusted Ebitda) increased by around four percent to 528 million euros. Analysts had expected a little more in terms of operating profit, but sales were as expected.
Zalando with significant increases
Europe’s largest online fashion retailer Zalando achieved sales in the double-digit billion range for the first time last year. Revenue climbed almost 30 percent to 10.4 billion euros. For the current year, Zalando expects sales to increase by 12 to 19 percent to a maximum of 12.3 billion euros. “We see a few uncertainties – not least because of the war in Ukraine,” said David Schröder, the manager responsible for operations. Adjusted operating profit (EBIT) climbed 11 percent to EUR 468.4 million in 2021.
Covestro pours out heavily
After an exceptionally strong year in 2021, the plastics specialist is confident about the new year. Group CEO Markus Steilemann calculates earnings before interest, taxes, depreciation and amortization (Ebitda) at 2.5 to 3.0 billion euros. In the best case, the operating profit would almost reach the almost 3.1 billion euros achieved in 2021. In 2021, sales rose by around half year-on-year to EUR 15.9 billion. All in all, Covestro earned 1.6 billion euros, a multiple of the previous year’s figure. The shareholders are to participate in this with a dividend of EUR 3.40 per share, after EUR 1.30 in the previous year.
Linde buys shares and increases dividend
The world’s largest industrial gases group, Linde, wants to buy back its own shares for up to ten billion dollars by July 2024 at the latest and thus pass on money to the shareholders, as the American-German group announced. Linde’s previous $5 billion share buyback, which was recently completed, took just over a year. The dividend, which Linde pays once a quarter, will be increased to $1.17 per share; most recently, the company had paid $1.06.
Software AG invests half a billion in the USA
Software AG buys the US company StreamSets for 524 million euros, as the second largest German software company announced. The takeover is expected to boost product sales by 12 to 16 percent. The operating result, on the other hand, will be burdened by minus 13 to minus 17 million euros. In the coming year, StreamSets should contribute to organic growth. According to the information provided, StreamSets deals with data integration for modern data stacks.
Zoom growth over?
The video conferencing service Zoom disappointed with its outlook, the stock fell significantly in after-hours US trading. For the current quarter, Zoom is still expecting a year-on-year increase in sales of around twelve percent to around $1.07 billion. A year earlier, revenue had almost tripled because companies switched to video conferencing during the pandemic. In the fourth fiscal quarter, which ended in January, sales rose 21 percent to $1.07 billion. Quarterly profit grew to $490.5 million from $260.4 million a year earlier.
Facebook and Tiktok restrict RT and Sputnik
Following EU moves to ban Russian state media RT and Sputnik, Facebook group Meta and video app Tiktok are restricting access to RT and Sputnik content in the European Union. Facebook’s political chief Nick Clegg wrote on Twitter to justify that one had received corresponding requests from several governments and the EU. A Tiktok spokesman confirmed the action taken against Russian state media accounts in the EU, including the Wall Street Journal and the US broadcaster NPR. Tiktok is owned by the Chinese group Bytedance.