market report
As of: 7/7/2022 7:47 a.m
Recession fears may be overblown, so the DAX should follow Wall Street and Asian markets higher. The price recovery should therefore continue for the time being.
At the moment, according to calculations by broker IG, it looks as if the DAX could start the trading day with an increase of around one percent. The leading German index rose 1.6 percent to 12,595 points yesterday.
“The good news for now is that the selling has stopped,” said CMC Markets market analyst Jochen Stanzl. “Nevertheless, after falling below the old low for the year, the market will most likely still need several weeks for a new bottom to form,” he warned against premature optimism. After all, in midsummer the seasonality does not exactly speak for a trend reversal.
No deep recession in sight
Last night she had The US Federal Reserve publishes its meeting minutes. Accordingly, the Fed wants to take another big interest rate step against the high inflation. Policymakers expect a 0.5 or 0.75 percentage point hike at the end of July is likely to be appropriate. Interest rate hikes and monetary tightening are extremely unpopular on the stock markets. In this particular situation, however, investors are concluding from the Fed’s determination that the risk of recession is not as great as recently feared.
In addition, the purchasing managers’ index for services in the US was not as bad as expected. “There is currently no sign of a deep recession,” comments Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank.
Wall Street with price premiums
The US stock exchanges closed with slight price increases after the minutes of the meeting were published. The Dow Jones closed 0.2 percent higher at 31,037 points. The tech-heavy Nasdaq advanced 0.4 percent to 11,361 points. The S&P 500 gained 0.4 percent to 3845 points.
Markets in Asia were also higher this morning as Fed minutes at least eclipsed recession fears: the Nikkei index was up 0.7 percent to 26,299 points, while the Topix rose 0.7 percent to 1868 points. The Shanghai stock exchange was up 0.2 percent. The index of major companies in Shanghai and Shenzhen gained 0.3 percent.
General Motors suffers sales slump in China
The largest US carmaker General Motors (GM) had to cope with a severe sales dampener in China in the second quarter in view of the new Covid lockdowns. In the three months ended June, GM sold just 484,200 vehicles in its key international market. In a year-on-year comparison, this corresponds to a decline of 35.5 percent. That marked GM’s worst result in China since early 2020, when auto sales plummeted at the start of the pandemic.
Start of construction for the VW battery cell plant in Salzgitter
The Volkswagen Group wants to start building its battery cell factory for electric vehicles in Salzgitter today. After a long period of preparation and the production of the first test series, the site of the existing engine plant is to be expanded to include its own cell production. It is the first such project by VW in Germany. In addition to CEO Herbert Diess, Chancellor Olaf Scholz (SPD) is expected to attend the laying of the foundation stone. The main aim is to reduce dependency on suppliers from Asia. Other corporations are also setting up battery cell plants or are involved in corresponding development cooperations.
GameStop stock split
The video games dealer GameStop wants to make its shares easier to trade for small investors. The US company approved a 1:4 stock split. At the regular close of trading last night, a GameStop share certificate cost $117.43. A stock split allows companies to increase the number of shares they hold. GameStop plans to pay out the additional shares in the form of a stock dividend. Investors receive additional share certificates instead of cash.
Boeing subsidiary Aurora builds carrier aircraft for Virgin Galactic
Virgin Galactic has signed a supply contract for two new spacecraft carriers with Boeing subsidiary Aurora Flight Sciences. As part of the agreement, Boeing’s aerospace research unit will supply parts of the carrier aircraft for assembly in 2025, Virgin Galactic said. The so-called “mother ships” are designed for about 200 flights per year. Founded by billionaire Richard Branson, the space tourism company is working on a more durable, mass-produced successor to its flagship SpaceShipTwo, which will be lowered from the fuselage of a carrier plane before accelerating to the edge of space.