market report
Status: 07/27/2022 07:29 a.m
The swing movement just above the 13,000 point mark in the DAX should initially continue today. Before the next expected interest rate hike in the USA in the evening, there is no buying mood on the stock exchange.
The German stock exchange barometer is expected to start trading at 13,170 points, around half a percent higher than yesterday’s closing level. Investors are exercising restraint ahead of the next rate hike by the US Federal Reserve (Fed).
How big will the rate hike be?
The Fed will most likely continue its fight against high inflation tonight. After a sharp interest rate hike in June, a further increase of 0.75 percentage points is expected. The key interest rate would then be between 2.25 and 2.5 percent, after having been at the zero line a few months ago. Even a larger increase of a full percentage point seems possible.
Wall Street under pressure
The specifications from Wall Street are rather unfavorable in the morning. A profit warning from the retail group Walmart created a bad mood on the US stock exchanges. A potential setback for the US economy from a slowdown in consumer spending prompted selling. The US standard value index Dow Jones closed 0.7 percent lower at 31,761 points. The tech-heavy Nasdaq fell 1.9 percent to 11,562 points. The broad S&P 500 lost 1.2 percent to 3921 points.
Alphabet and Microsoft with numbers
However, good quarterly figures from US companies provided some relief after the US stock market closed. Google’s parent company Alphabet achieved sales growth of 16 percent to almost $69.7 billion in the second quarter, as the US technology group announced on Tuesday evening. Thus, Alphabet almost reached the expectations of analysts.
The lower demand for PCs around the world made things difficult for the Windows group Microsoft, as did declining advertising budgets and the stronger dollar. However, Microsoft also increased its revenues significantly by twelve percent to $51.9 billion. Microsoft earned $16.7 billion, two percent more than in the same period last year.
Asian stock markets undecided
Investors also prefer to take a break on Asia’s stock exchanges. The Japanese Nikkei index was 0.1 percent higher at 27,693 points. The Shanghai stock exchange was down 0.1 percent. The index of the most important companies in Shanghai and Shenzhen lost 0.4 percent.
Euro back towards parity
On the foreign exchange market, investors are looking forward to the interest rate decision in the USA. The euro is once again approaching parity with the US dollar. In the morning, the European single currency is trading at $1.0148.
Oil remains high
Oil prices are little changed in the morning. A barrel of North Sea Brent currently costs $104.45. Prices rose again yesterday because of Russia’s announcement that it would again reduce natural gas supplies through the Nord Stream 1 Baltic Sea pipeline from today. A troy ounce of gold in the morning still costs 1715 dollars.
Adidas suffers from China business
A whole series of quarterly figures and prospects for German and international companies keep investors busy in the morning. The sporting goods manufacturer Adidas had already reduced its forecast for the current financial year yesterday evening. The corona restrictions in China are affecting the company more than expected. Instead of sales growth of around eleven percent, only an increase of five to nine percent can be expected in 2022. At around 1.3 billion euros, profit from continuing operations is expected to be a good quarter lower than previously planned.
Deutsche Börse earns more
On the other hand, Deutsche Börse is becoming somewhat more optimistic after strong results in the second quarter. The group now expects net sales in the current year to be “significantly” above the original plan of EUR 3.8 billion, as the company announced yesterday after the stock market closed. In the second quarter, net sales increased by 15 percent to 1.02 billion euros. The bottom line was a profit of around 341 million euros, ten percent more than a year ago.
Qiagen raises forecast
The diagnostics group Qiagen is also more confident about 2022 after the first half of the year. The DAX company now expects sales of at least $2.2 billion and adjusted diluted earnings at least $2.30 per share. Group sales fell in the second quarter compared to the same quarter last year by nine percent to 516 million dollars. Adjusted earnings fell to $0.51 per share from $0.67 per share.
Lufthansa on strike
With a warning strike by the ground staff, the Ver.di union wants to increase the pressure in the ongoing wage negotiations with Lufthansa. The strike, which is expected to last until 6 a.m. tomorrow, hits passengers hard: Lufthansa has canceled more than 1,000 flights at the Frankfurt and Munich hubs and fears the effects until Friday, the last day of school before the summer holidays in Bavaria. 134,000 passengers had to change or abandon their travel plans.