market report
Investors on the German stock market are keeping their feet still before the interest rate decisions in the coming week. Big jumps in the DAX are not to be expected today – despite positive job data from the USA.
Investors are once again undecided about the US inflation figures due next week and the interest rate decisions by the US Federal Reserve and the European Central Bank (ECB). The DAX will probably continue to move around the 16,000 point mark.
The broker IG assesses the leading German index 0.1 percent higher at 16,011 points before the start of trading. The weekly high of 16,114 points remains a first orientation point upwards. The 21-day line would probably provide support at the current 15,966 points. It is the indicator for the short-term trend and is currently running sideways.
The unexpectedly clear increase in initial jobless claims in the US provided some impetus towards the end of the week. What is a rather negative signal for the economy may mean success for monetary policy in the fight against inflation. Accordingly, interest rate speculation, which had recently boiled up, cooled off and bond yields fell again. The number of applications is now not far from the critical mark of 270,000. This is seen as a turning point that signals a lasting slowdown in the recently booming labor market.
To curb high inflation and cool the overheated labor market, the Fed had raised interest rates from near zero to the range of 5.00 to 5.25 percent since last year. In the opinion of most economists, however, it will now keep its feet still at the next interest rate meeting. The monetary authorities could refrain from an increase to gain time to sift through incoming economic data. However, this should not be interpreted as a signal that the interest rate peak has been reached, stressed Fed Director Philip Jefferson recently.
The chances of the Fed raising rates by a quarter point on June 14 are now one in four, with a 75 percent chance of a pause. However, the market believes that a rate hike on July 26, on the other hand, is largely certain with a probability of around 80 percent. “I wouldn’t bet everything on a rate hike, but I think we should be looking at at least 50 percent,” said Tony Sycamore, an analyst at IG Markets in Sydney.
The prospect of a temporary interest rate pause caused price gains on Wall Street yesterday. The tech-heavy Nasdaq 100 almost erased losses from a weak Wednesday the night before, advancing one percent. The Dow Jones closed 0.5 percent higher at 33,833 points. The broad S&P 500 gained 0.6 percent to 4293 points.
The recovery on the US stock exchanges is also reflected in stocks in the Asia-Pacific region in the morning. They rose to their highest level since mid-February on Friday. The Nikkei index, which comprises 225 values, was 1.8 percent higher at 32,216 points. The broader Topix index rose 1.4 percent to 2,222 points. The Shanghai Stock Exchange was unchanged. The index of the most important companies in Shanghai and Shenzhen lost 0.1 percent.
China’s statistics agency released inflation data for May. Accordingly, consumer prices rose by 0.2 percent, producer prices experienced a decline of 4.6 percent. Analysts polled by Reuters had expected a reduction of 4.3 percent. In April, consumer prices rose 0.1 percent, the slowest pace in more than two years. In May, analysts expected an increase of 0.3 percent. The latest economic data had shown that China’s economy was only slowly recovering after the strict corona restrictions were lifted in December due to the global economic slowdown and weakening domestic demand.
“The risk of deflation continues to weigh on the economy,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. “Recent economic indicators are sending consistent signals that the economy is slowing down,” he added. Analysts have revised down their forecasts for economic growth this year amid persistent signs of a slowdown. The government has set a modest GDP growth target of around 5 percent for this year after falling well short of the 2022 target.
The California Transportation Authority has approved a Mercedes-Benz automated driving system on designated highways. The agency yesterday imposed conditions on the use of the carmaker’s Drive Pilot system. For example, it may only be operated at speeds of a good 60 kilometers per hour during the day. This makes Mercedes the first car manufacturer in California to be allowed to sell or rent cars with such an automated driving system. In particular, he beats US rival Tesla, for whom, according to calculations by the Reuters news agency, California is an important market with 16 percent of global deliveries.
Binance, the world’s largest crypto trading platform, has suspended US dollar deposits. Its banking partners are also preparing to shut down withdrawal channels as early as June 13, the crypto exchange announced yesterday. Other fiat currencies such as the euro are not affected. The move comes after the US Financial Services Agency supported a freeze on the cryptocurrency exchange’s assets earlier in the day. The American Securities and Exchange Commission sued Binance and its boss Changpeng Zhao at the beginning of the week.
The sports car manufacturer Porsche wants to catch up with electromobility. On the occasion of the 75th anniversary of the sports car, the Stuttgart-based company presented the concept of a new electric sports car yesterday. According to the press release, Porsche is still talking about a possible series production as a “vision”. So far, the carmaker has only offered a purely electric model, the Taycan. By 2030, Porsche wants to deliver more than 80 percent of its new vehicles fully electric.
Tesla opens its Supercharger charging network for electric cars from rival General Motors (GM). From next year, GM customers will have access to around 12,000 charging stations from Tesla, as the largest US carmaker announced yesterday. Tesla’s charging technology is becoming more and more popular. GM boss Mary Barra spoke of a step that could bring the industry to a uniform charging standard in North America.