Concerns about tighter monetary policy by the US Federal Reserve are likely to deter investors from buying stocks today. The DAX will probably start with significant losses.
Banks and brokers assume that the DAX will start trading significantly lower. Broker IG expects Xetra trading to start at 9 a.m. with a drop of 1.8 percent to 15,985 points. Yesterday the DAX had gained 0.7 percent to 16,271 points. In the course of the day, the leading German index only missed its record high by a few points.
Is the Fed pulling the reins?
Investors are reacting violently to the Federal Reserve’s minutes released yesterday evening. They show that some Fed members are in favor of starting to reduce the central bank’s total assets shortly after the first rate hike. In addition, it was repeatedly emphasized that both economic and inflation developments speak in favor of a faster exit from the loose monetary policy. A faster rate hike than previously expected could be justified, it said.
This is bad news for investors, because the loose monetary policy of the central banks is considered to be the main reason for the soaring stock markets that have been soaring for years.
Dow and Nikkei losses
In the USA, Wall Street closed yesterday at discounts: The Dow Jones, which had temporarily risen to a record high of 36,952 points, fell 1.1 percent to 36,407 points. The technology-heavy Nasdaq was down 3.3 percent to 15,100 points. The broad S&P 500 lost 1.9 percent to 4700 points.
The markets are also falling behind in Asia. The Japanese Nikkei index closed 2.9 percent lower at 28,488 points. The broader Topix index fell by around two percent to 1999 points. The Shanghai stock exchange was 0.2 percent in the red. The index of the most important companies in Shanghai and Shenzen lost 0.9 percent.
“Of course, pricing in a faster rate of Fed tapering is not doing well on Asian assets and is likely to result in more outflows in the region, translating into both weaker stocks and devaluation pressures on the currency front said Carlos Casanova, senior economist for Asia at Union Bancaire Privee in Hong Kong.
Euro exchange rate hardly changed
So far, the euro has not moved much. In the morning, the common currency was trading at US $ 1.1304, around the same rate as the previous evening. The downward movement of the euro after the publication of the minutes of the most recent interest rate meeting of the US Federal Reserve will not continue for the time being.
A faster exit from the Fed’s ultra-loose monetary policy should support the dollar and, in turn, weigh on the euro.
Amazon and Stellantis work together
Amazon secures a more prominent place in millions of future vehicles through a deal with the auto company Stellantis. The group with brands such as Peugeot, Chrysler, Fiat and Opel wants to embed Amazon’s voice assistant Alexa in its new digital cockpit, as the companies announced at the technology fair CES in Las Vegas.
For the world’s largest online retailer, it is a success in the race with, among others, Google for a place in the car. The Internet group is also trying to reach its users in the car, among other things with the Alexa competitor Google Assistant. With the deal, Amazon also secures business for its cloud service AWS, which the Stellantis vehicles will use.