DAX hardly changed: Investors are holding back

In view of the business figures of large companies, new economic data and the US interest rate decision, things should initially be calm on the stock exchanges today. The DAX will probably start slightly weaker.

After the DAX slipped into the red yesterday due to Russia’s announcement that it would further restrict gas exports to Germany, it is likely to extend its slight setback somewhat today. The broker IG indexed the leading German index 0.2 percent lower to 13,182 points before the start of trading.

In the previous week it had recovered significantly and ended a successful week on the stock exchange with a price increase of almost exactly three percent. In view of an eventful week with a lot of business figures from important companies, current economic data and the US interest rate decision, investors are now holding back, said market analyst Jeffrey Halley from broker Oanda.

Gazprom continues to reduce gas supplies

Already at the beginning of the week, the announcement of further falling gas supplies from Russia hit the DAX. “Here in Germany it is primarily about an almost inevitable stalling of growth due to high energy prices and an escalation in the gas supply,” stated Jochen Stanzl from the online broker CMC Markets.

Just a few days after gas deliveries resumed, the Russian gas company Gazprom announced yesterday that it would reduce the gas flow through the Nord Stream 1 pipeline to just around 20 percent in the middle of the week. Investors are also keeping an eye on the two-day meeting of the US Federal Reserve. Despite recession worries, stockbrokers are expecting another big jump in interest rates by 0.75 percentage points for tomorrow. The hike is likely to be included in the prices, but as always, the outlook of the central bankers will be more important.

Two days before the rate hike, tech stocks on the US stock exchanges came under pressure again yesterday. The tech-heavy Nasdaq 100 index extended its recent losses somewhat, falling 0.55 percent. Higher interest rates can cause financing costs to rise, particularly for fast-growing technology companies. At the most recent meeting, the Fed had already raised its key interest rate by 0.75 percentage points. An even larger step cannot be ruled out in view of the high inflation, but was recently rejected by several central bankers.

Meanwhile, the reporting season is also gaining momentum. Deutsche Börse, the consumer goods group Unilever and the luxury goods group LVMH, among others, now provide insight into the books. In the USA, the accounting season of the large technology groups starts with the quarterly figures of Google and YouTube mother Alphabet and the software giant Microsoft. At Alphabet, experts expect faltering sales growth because the advertising business is suffering from the impending downturn in the global economy. Microsoft has already warned that the strong dollar has hurt business.

Before the announcement of the business figures, the shares of Apple, Amazon, Alphabet, Microsoft and Facebook parent Meta Platforms fell between 0.4 and 1.5 percent yesterday. The Nasdaq came under pressure as a result of nervous trading. The standard values, on the other hand, held up better. The leading index Dow Jones ended trading with a moderate gain of 0.28 percent.

China’s stock markets rose today on the back of stronger tech stocks. The decision by the e-commerce giant Alibaba to aim for a primary listing in Hong Kong in addition to New York provided momentum. So far there has only been a secondary listing in the financial metropolis, so investors from mainland China have hardly any opportunities to trade the paper. The CSI 300 index of mainland China’s top 300 companies rose 0.8 percent and Hong Kong SAR’s Hang Seng index rose 1.4 percent. Meanwhile, in Japan, the Nikkei 225 fell 0.1 percent just before the close.

Big bank UBS missed expectations despite profit increase

From April to June 2022, the major Swiss bank UBS made the highest profit in a second quarter in ten years. With a tailwind from the sale of a stake in Japan, the world market leader in business with the rich and super-rich improved its bottom line result by five percent to $2.1 billion, as UBS announced today. However, the interim report, with which the Zurich-based institute opened the series of results from the major European banks, did not quite meet market expectations. Analysts had expected net income of $2.4 billion.

The largest US retailer Walmart expects business to be worse given the high inflation and the strong dollar. The shopping giant said after the market closed yesterday evening that rising prices for urgently needed goods such as groceries and petrol have dampened customers’ willingness to spend on other products. In order to continue to reduce inventories, especially for clothing, stronger discounts are necessary.

Walmart therefore expects operating profit in the current second fiscal quarter to fall by 13 to 14 percent compared to the previous year. In the financial year as a whole, earnings are likely to fall by eleven to 13 percent. The stock responded after hours with a price slump of eight percent. Walmart is also groaning under the strong dollar. In the current financial year, the group expects sales to be impacted by billions of euros due to exchange rate effects.

The high demand for skilled workers has boosted the business of the personnel service provider Amadeus Fire. In the first half of the year, revenues increased by 12.7 percent to 201.1 million euros, while the operating result (EBITA) climbed by one percent to 29.8 million euros, as the company announced today. The Executive Board assumes that permanent placement will continue to develop as expected and has confirmed its annual targets. These envisage an increase in Ebita of seven to nine percent.

In the 20th year of its existence, the Leipzig Porsche plant is increasingly being expanded to become a location for electromobility. In addition to the E-Macan, which will go into series production in Leipzig from 2023, a new large all-terrain vehicle with an electric drive is to be built in Saxony. The vehicle is located “in the luxury segment”, said Porsche. According to media reports, the start of production is planned for 2026.

Internet giant Amazon is raising fees for its Prime streaming service due to high inflation and increased operating costs. In Germany, Amazon’s second largest market after the US, the cost of an annual Prime membership will increase by 30 percent to EUR 89.90, the group announced last night. The changes will come into effect on September 15 for new customers or subscription renewals. Amazon justified the price increases with “increased inflation and operating costs” as well as faster delivery and more content to stream.