Market report: Bank worries weigh on the stock market

market report

Status: 04/26/2023 09:41 a.m

Weak specifications from the USA slow down the DAX in the morning at the start of trading. Headwind for the stock markets is coming from the banking sector again. To do this, investors must evaluate a number of business figures.

Almost half a percent below the previous day’s closing level, at 15,800 points, the German stock exchange barometer started trading on XETRA in the morning. The DAX is thus reacting primarily to the weak specifications from the USA on the previous evening.

“The willingness to buy on the German stock market is currently low,” commented the experts at Helaba. “So far, however, there has not been a greater willingness to sell – despite disappointing bank balance sheets in some cases and concerns about the economy that have increased again.”

Bank stocks came under pressure on Wall Street last night after the results of the US regional bank First Republic. Above all, the surprising outflow of deposits of more than 100 billion dollars caused excitement in the market. The stock lost more than 49 percent. The Dow Jones index lost one percent to 33,531 points. The tech-heavy Nasdaq fell 2 percent to 11,799 points and the broad S&P 500 fell 1.6 percent to 4,072 points.

Worries about new problems in the banking sector also weighed on the Asian stock exchanges in the morning. The Japanese Nikkei index closed 0.7 percent lower at 28,416 points. The Shanghai stock exchange was down 0.3 percent. The index of the most important companies in Shanghai and Shenzhen lost 0.1 percent.

The European common currency oscillates around the round mark of 1.10 dollars in the morning. The euro is currently trading just above it again at $1.1010. The price of oil is slightly higher in early trading. A barrel of North Sea Brent currently costs $81.04, half a percent more than yesterday. Oil prices are being supported by production cuts in major oil-producing countries such as Saudi Arabia. The price of a troy ounce of gold is unchanged at 1998 dollars.

Thanks to better economic and income prospects, consumer sentiment in Germany is better than it has been for over a year. The barometer for the consumer climate calculated for May rose by 3.6 points to minus 25.7 points, as the GfK market researchers announced on Wednesday. With the seventh consecutive increase, the highest level since April 2022 was reached. Income expectations rose for the seventh time in a row, returning to pre-Ukraine war levels for the first time.

In DAX and Co., the courses in the morning are influenced by a number of business figures. Three companies from the leading index provide insight into their balance sheets. At the sporting goods group Puma, earnings before interest and taxes (EBIT) fell by 10.5 percent to 175.5 million euros in the first quarter due to high inventories and discounts. Group sales increased currency-adjusted by 14.4 percent to 2.19 billion euros. Puma is only hoping for an improvement in the second half of the year. In the current quarter, sales growth of a maximum of five percent can be expected.

The Beiersdorf consumer goods group started the new fiscal year with growth. Sales grew in all regions in the first quarter, particularly strongly in the Americas region, as Beiersdorf announced when it published its final figures for the first quarter. As already known, revenues increased by 12.2 percent to 2.5 billion euros. The group confirmed the forecast, which was increased at the beginning of April. For 2023, Beiersdorf anticipates organic growth in the Group and in the consumer division in the mid to high single-digit percentage range.

Symrise got off to a good start in the year thanks to high demand for fragrances, cosmetic active ingredients and products for pet food. Revenue rose nearly 13 percent to €1.23 billion in the first quarter, slightly more than analysts had expected. Symrise grew particularly strongly in fragrances in the luxury segment and achieved high, double-digit percentage growth, as well as in the pet food area.

The real estate group Vonovia is selling a minority stake in its “Südewo” residential portfolio in Baden-Württemberg to the US financial investor Apollo for one billion euros. The transaction values ​​the Südewo portfolio at EUR 3.3 billion, which means a discount of less than five percent on Südewo’s fair value as of December 31, 2022, Vonovia said in the morning. Vonovia has also secured a long-term option to buy back the stake, but there is no obligation. Vonovia intends to continue managing the portfolio of more than 21,000 apartments.

The battery company Varta from the SDAX presented its balance sheet yesterday evening. In the past year, Varta slipped deep into the red. Due to write-downs on the rechargeable button cell business, the loss was around 200 million euros. At EUR 69.5 million, adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) were above the forecast EUR 55 to 60 million. Varta wants to cut 390 jobs in Germany by the end of next year.

Business figures from the tech giants Microsoft and Alphabet, which were released yesterday after the US stock market closed, were well received by investors. At Microsoft, business is running smoothly thanks to popular software and cloud services. In the three months ended March, sales increased 7 percent year-on-year to $52.9 billion. The bottom line is that the group earned $18.3 billion, or around nine percent. Microsoft beat Wall Street analysts’ forecasts.

Google’s parent company Alphabet has also exceeded investors’ expectations with its quarterly figures. According to its own statements on Tuesday, the Internet giant booked a profit of 15 billion dollars in the first quarter of the year. Sales rose to nearly $70 billion. That was about $1 billion more than analysts had expected.

Thanks to credit card customers who are willing to spend money, the US financial group Visa continues to earn brilliantly. In the second fiscal quarter (ended March), profit rose 17 percent year-on-year to $4.3 billion. Revenues increased 11 percent to $8.0 billion. Despite high inflation and ongoing economic risks, Visa’s payment volume grew by ten percent. Overall, the quarterly figures were also significantly better than expected by analysts.

The luxury goods group Kering, which was recently struggling with problems at its most important brand Gucci, again grew weaker than expected in the first quarter. Adjusted for the consequences of the weaker euro compared to the previous year and takeover effects, sales growth was around one percent, the company listed in the EuroStoxx 50 announced yesterday after the stock market in Paris closed. Experts surveyed by Bloomberg had expected an increase of almost three percent.

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