market report
Investors are unlikely to venture out of cover before the ECB’s interest rate decision this afternoon. However, the DAX remains within reach of its record high of 17,816 points.
According to calculations by banks and brokerage houses, the DAX should start the trading day hardly changed. Yesterday, the leading German index remained close to its record high. The leading German index closed up 0.1 percent at 17,716.71 points. After yesterday’s job data from the US private sector and the speech by US Federal Reserve President Jerome Powell failed to provide any fresh impetus, today the European Central Bank’s (ECB) interest rate decision is coming into focus.
According to the majority of experts, the ECB is likely to leave its key interest rate unchanged for the fourth time in a row. By September, it had raised its key interest rates quickly and significantly to the current level due to the sharp rise in inflation, but has not made any changes since then. The deposit rate, which is important for monetary policy, is currently 4.0 percent. The main refinancing rate is 0.5 percentage points higher.
Investors are hoping for interest rate cuts because they would tend to strengthen the stock market. The experts at Moody’s Analytics can imagine a first interest rate hike in April or June. The asset manager Vanguard sees the easing of restrictions beginning in June. The economists at DZ Bank also do not expect a turnaround in interest rates in the euro area until the course of the year.
The US guidelines are friendly. The Dow Jones Index closed 0.2 percent higher at 38,661 points in the middle of the week. The technology-heavy Nasdaq advanced 0.6 percent to 16,031 points. The broad S&P 500 gained 0.5 percent to 5,104 points.
According to the Federal Reserve (Fed), the US economy has recently grown moderately, the Fed announced in its “Beige Book” economic report. There were signs that the labor market had continued to ease. However, wages continued to rise and there was some renewed inflationary pressure.
The outlook for future economic growth remained generally positive, with respondents expecting stronger demand and less restrictive financial conditions over the next six to 12 months.
Japan’s Nikkei stock index slipped from its record high today, while the yen strengthened on hopes that Japan’s central bank (BoJ) will abandon its ultra-loose monetary policy later this month. BoJ monetary watchdog Junko Nakagawa signaled that she believes the conditions are in place for an exit from massive stimulus measures as the economy steadily approaches the central bank’s inflation target of two percent. The Nikkei closed 1.2 percent lower at 39,598 points.
A great desire to travel and increased ticket prices gave Lufthansa a jump in profits last year: adjusted operating profit rose by 76 percent to 2.7 billion euros. As analysts expected, the MDAX group achieved the third-best result in the company’s history. Sales increased by 15 percent to 35.4 billion euros, as the group’s airlines transported a fifth more customers with more than 120 million passengers.
The bottom line is that Lufthansa earned almost 1.7 billion euros, more than twice as much as in the previous year, which was still affected by the Corona crisis.
Merck has to give up significantly due to the weak demand after the Corona boom of previous years. The adjusted operating result (Ebitda) fell by a good 14 percent to 5.88 billion euros in 2023. For the year as a whole, Merck had sales of almost 21 billion euros, a decrease of 5.6 percent. Negative exchange rate effects also caused headwinds. The bottom line is that profits fell by 15 percent to 2.8 billion. Shareholders are to receive an unchanged dividend of EUR 2.20 per share.
The US financial investor KKR is negotiating with the Hamburg wind and solar park operator Encavis about a takeover that could be worth more than two billion euros. Encavis confirmed contacts with KKR “about interest in a possible transaction with the company.” However, the talks are still at an early stage. There is therefore no guarantee that a takeover will take place. According to a Bloomberg report, Encavis, which is listed in the MDAX small cap index, could be valued at more than two billion euros. An agreement was possible in the next few days, it said. KKR declined to comment.