market report
The prospect of an end to US interest rate hikes is causing investors to buy stocks. The DAX jumps above the much-noticed mark of 15,000 points – opening up further upward potential.
After a weak October, November is getting off to an extremely promising start for the DAX: At the start of trading, the German stock market barometer increased its price gains from yesterday, rising by 0.7 percent to 15,034 points. Tailwind for share prices comes from the US Federal Reserve: Fed Chairman Jerome Powell raised hopes of an end to monetary policy tightening last night.
With the jump over the 15,000 point mark, the technical chart picture in the DAX brightens significantly. At least the German leading index is closing its downward price gap at 14,936/14,985 points and regaining its old low at 14,948 points. Investors could now expect a short-term bottom formation with an imputed follow-up potential of 300 points, calculates HSBC chart technology expert Jörg Scherer.
Scherer also highlights the high proportion of US private investors who are pessimistic; according to a recent survey by the American Association of Individual Investors (AAII), this had jumped to over 50 percent. “This corresponds to the highest level of the year and should rather support the market,” said the HSBC expert. A high proportion of pessimists is considered a counterindicator for the stock markets and therefore a harbinger of rising prices.
But the seasonality also gives hope, as yesterday marked the starting shot for the best six months of the year on the stock market on average. In this context, experts also speak of the “Halloween effect” or the “best six months” strategy. In October, the DAX suffered a loss of 3.8 percent – it was the third month of losses in a row.
In the short term, however, it is primarily the US Federal Reserve Bank that is giving the markets a boost. As expected, the monetary authorities paused interest rates yesterday and left the key monetary policy rate in the range of 5.25 to 5.50 percent. However, Fed Chairman Jerome Powell once again signaled that the US central bank could now act more cautiously after its aggressive series of hikes.
That boosted prices on Wall Street. The Dow Jones index of standard stocks closed 0.7 percent higher at 33,274 points. The broader S&P 500 advanced 1.1 percent to 4,238 points. The Nasdaq technology exchange index gained 1.6 percent to 13,061 points.
Hopes for an end to monetary policy tightening in the USA are also causing the stock markets in Asia to rise. The Japanese leading index Nikkei closed 1.1 percent higher at 31,950 points and broke through the psychologically important mark of 32,000 points for the first time in two weeks. “The whole world has been waiting for the Fed to slow down, take a pause and give a sign that it’s done with this,” said Steen Jakobsen of Saxo Bank in Tokyo.
The overall friendly mood on the capital markets is also driving up oil prices. A barrel (159 liters) of North Sea Brent for delivery in January costs $85.96 this morning. That’s 1.6 percent more than yesterday. The prospect that the global economy will not be stifled by excessively tight monetary policy in the USA supported the recently rather shaky demand outlook for crude oil.
The dollar reacted to the Fed interest rate decision and the press conference with Jerome Powell with losses. The US currency is also slightly weaker in the morning. At the same time, the euro rose to $1.0593. A troy ounce of gold costs $1,985 this morning.
Meanwhile, the current reporting season on the German stock market is keeping investors on tenterhooks. The DAX group Zalando has once again increased its profits with its austerity measures despite weak business. However, the online fashion retailer lowered its sales targets for the full year in the evening. For the year as a whole, the group now expects a decline in group revenues of 0.5 to three percent. The gross merchandise volume (GMV) is likely to be between 14.5 and 14.9 billion euros.
According to a press report, the car manufacturer Mercedes-Benz is threatened with losses in sales and profits this year due to the ongoing shortage of 48-volt batteries. The DAX group will have to accept between five and seven billion euros less revenue, reports the “Handelsblatt”, citing company circles. This could result in a loss of profits of more than half a billion euros.
The healthcare group Fresenius is raising its annual target after a significant increase in earnings in the third quarter. From July to September, the adjusted operating result (EBIT) rose by eight percent to 519 million euros. The bottom line, however, was a loss of 406 million euros after a profit of 321 million euros in the same period of the previous year, due to value adjustments as a result of price losses at the dialysis subsidiary FMC.
The dialysis provider Fresenius Medical Care (FMC) is looking more positively at its profit development in the current year. The company announced in the evening that the operating result is expected to increase by a low single-digit percentage compared to the previous year. Until now, FMC had assumed that at best the previous year’s result of 1.54 billion euros would be achieved.
The return of the desire to travel and expensive tickets gave Lufthansa the second best quarter in its history in the summer. In the months July to September, the operating result (adjusted EBIT) was almost 1.5 billion euros, almost a third higher than a year earlier. Lufthansa only earned more in day-to-day business around the bankruptcy of Air Berlin in the third quarter of 2017. This time, the average revenue per ticket was higher than ever before.
Despite the sluggish real estate market, the operator of the Immobilienscout24 advertising platform, Scout24, is increasing its profit forecast for the current year. Sales will only increase by 14 percent instead of 15 percent as planned because commissions for brokerage and construction financing are declining, said Scout24. However, the operating return (Ebitda margin) will be 19 to 21 percent, higher than previously planned (18 to 19 percent).
The Duisburg steel trader Klöckner & Co (KlöCo) is buying just a few days after announcing an austerity program and job cuts in the USA. The group is taking over the US metal components manufacturer Industrial Manufacturing Services (IMS). The company is highly profitable and has annual sales of around $30 million, according to KlöCo. It was agreed not to disclose the purchase price.
After strong growth in the first nine months, confidence is growing at the Hessian plant manufacturer PVA TePla. Sales in the current year will be at the upper end of expectations at around 260 million euros, as will the operating result (Ebitda) at around 40 million euros.
The high demand for the weight loss drug Wegovy has brought the Danish drug manufacturer Novo Nordisk record results. In the third quarter, sales grew by 29 percent to 58.7 billion Danish crowns (7.86 billion euros), while operating profit (EBIT) climbed by 33 percent to 26.9 billion crowns. However, the company cannot meet the high demand for the weight loss injection, which is why the number of patients who can start treatment is limited.
A declining desire for travel among consumers is causing problems for AirBnB. The accommodation broker therefore announced yesterday evening a surprisingly low sales target of 2.13 to 2.17 billion dollars for the current quarter. At the same time, AirBnB is coming under increasing political pressure. Some states are restricting the rental of private accommodation via AirBnB and similar platforms due to a housing shortage and rising rents.
The oil and gas multinational Shell benefited from higher refining margins and higher oil prices in the third quarter. The surplus has more than doubled compared to the second quarter at a good seven billion dollars. The group thus met the expectations of the experts. The company also announced further share buybacks.
With its forecast, the chip company Qualcomm signals a recovery in the recently shrinking smartphone market. For the current first quarter, Qualcomm forecast sales of between $9.1 and $9.9 billion. Analysts had expected an average of 9.26 percent. The share temporarily rose by around three percent in after-hours trading.