Fear of interest rates: DAX before a new price slide


market report

Status: 08/29/2022 07:42 a.m

After the price drop on Friday, the DAX found no bottom at the beginning of the new week either. The German stock market is facing a new sell-off. The DAX is likely to start the new week at a sharp discount.

The broker IG sees the German standard values ​​at 12,786 points at the moment, which is a minus of 1.4 percent compared to the XETRA closing price on Friday. At the end of the week, the DAX had collapsed by 2.3 percent to 12,971 points. At the beginning of the new week, investors are still in the process of processing the speech by US Federal Reserve Chairman Jerome Powell at the much-attended central bank meeting in Jackson Hole, America.

Aftermath of Jackson Hole

Powell prepared investors for a tough fight against inflation on Friday and dismissed speculation that interest rates would be slowed. In doing so, he dashed the hopes of some investors that they would rush to the markets’ aid, as so often in the past.

“The statements were hawkish, Powell is pushing the pedal to the metal when it comes to fighting inflation,” said market strategist Lindsey Bell of wealth manager Ally.

Great likelihood of major US interest rate hike

“The key takeaways are that curbing inflation is the Fed’s top priority and that interest rates need to be raised to a hawkish level of 3.5-4.0 percent,” said Jason England, portfolio manager at Janus Henderson Investors.

The likelihood of a large rate hike of 0.75 percentage points at the next Federal Reserve meeting in September had skyrocketed after Powell’s speech. It’s now at an impressive 74.5 percent, according to CME Group’s Fed Watch Tool.

Selling off on Wall Street

The prospect of a prolonged period of rising interest rates in the US sent Wall Street plummeting at the end of the week. Soaring energy prices, with gas prices at record highs, also gave investors a headache.

The Dow Jones index of standard values ​​closed three percent lower at 32,283 points. The tech-heavy Nasdaq fell 3.9 percent to 12,141 points. The broad S&P 500 lost 3.4 percent to 4057 points.

Nikkei deep in the red

The increasing risk of aggressive interest rate hikes in the USA is also dampening the buying mood of investors in Asia in the morning. The Nikkei index, which comprises 225 values, was 2.8 percent lower at 27,851 points. The Shanghai stock exchange was down 0.7 percent. The index of the most important companies in Shanghai and Shenzhen lost 1.1 percent.

Euro only just above 20-year low

Rising US interest rate expectations have given the dollar a boost against all major currencies. In return, the euro is also under pressure at the beginning of the week: In Asian foreign exchange trading, the European common currency falls to $ 0.9915 and is therefore very close to its 20-year low marked a week ago.

gold under pressure

Meanwhile, the rising US dollar is making commodities more expensive for investors from non-dollar countries, thus depressing demand. The price of gold is also suffering as a result. The rising US interest rate expectations are also weighing on the yellow precious metal, as it does not yield any interest itself. The price of a troy ounce of gold fell 0.7 percent to $ 1,722 in the morning.

Bayer continues to develop hopeful Asundexian

In the DAX, focus is on Bayer shares in the morning. The pharmaceutical company now wants to test its drug candidate Asundexian against strokes in studies relevant to approval on a broad group of patients. Based on the phase II data, the phase III development program Oceanic will be started, the DAX group announced on Sunday. The program’s success will determine whether the drug becomes a successor to Bayer’s Xarelto, another billion-dollar anticoagulant.

Hapag-Lloyd sees normalization of supply chains

The boss of the Hamburg shipping company Hapag-Lloyd, Rolf Habben Jansen, sees clear signs of a normalization of the tense supply chains. “Six months ago, each of our ships was three or four times overbooked, now the ships are maybe 20 percent overbooked. That’s a key indicator,” Habben Jansen told the “Welt am Sonntag”. The return times for empty containers have also fallen. And the situation in the ports has also eased further, from the west coast of the USA to Asia and South America.

Vodafone is also bringing slicing to 4G networks

In the future, Vodafone will also introduce a technology in its 4G networks in which each application gets exactly the piece of the network that it needs. The company announced this today in Düsseldorf. So-called network slicing was previously only available in the networks of the fifth generation of mobile communications (5G). Vodafone is reacting to the fact that different network applications can require very different speeds, data rates or capacities, even in conventional LTE networks (4G).

Bulgari boss hopes for record year 2022

The jewelry and watch manufacturer Bulgari is aiming for a new record year: “2021 was already a record year for Bulgari, and this year will be significantly better. We are growing in the high double-digit percentage range for both watches and jewelry,” said Bulgari boss Jean-Christophe Babin in an interview with the “NZZ”. The corona measures in China are still a challenge.

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