market report
Growing doubts about an early and significant interest rate turnaround by the US Federal Reserve are causing investors to shy away from making larger purchases. A look at the DAX chart also urges caution.
After a mixed first week of trading, the new week on the German stock market is not really looking promising. The DAX made up little ground at the start of trading; at the opening of the XETRA, the German standard stocks rose by 0.1 percent to 16,618 points.
Investors are increasingly skeptical as to whether the US Federal Reserve will really initiate the interest rate turnaround as quickly and as boldly as recently hoped. According to the CME Group’s Fed Watch Tool, only 60.9 percent of market participants expect a 25 basis point rate cut at the Fed meeting in March. For comparison: a week ago it was 73.4 percent.
From a technical chart perspective, the German stock market barometer is in trouble, as it missed its all-time high by 42 points on the first trading day of the year. There is now a double high in the DAX chart and therefore a valid harbinger of price losses. The DAX has seen an upper trend reversal, explains Jochen Stanzl, chief analyst at broker CMC Markets. “That’s why, in the best case scenario, a rocky stock market can now be expected, always with the risk of further falling prices.”
Analyst Claudia Windt from Helaba, on the other hand, speaks of a “healthy consolidation”. She points out that investors tend to exaggerate at the end of the year, which is then known as a “year-end rally”. “Now 2024 begins with a bit of disillusionment, or rather a greater sense of reality,” and exaggerated expectations of key interest rate cuts are disappearing.
On the corporate side, the focus in the new week will be on the first significant quarterly balance sheets from the USA. On Friday afternoon (CET) JPMorgan, Bank of America and Citigroup reported on their past quarter.
“The bar for fourth-quarter results is higher than in previous quarters, but we expect S&P 500 companies as a whole to exceed analyst forecasts,” Goldman Sachs analysts wrote in a note to clients.
The US inflation data on Thursday will also be important in the new week. Investors in this country are now focusing their attention primarily on data from industry. According to the Federal Statistical Office, industry in Germany received slightly more orders in November.
Orders increased by 0.3 percent compared to the previous month. However, the development was less strong than analysts expected on average, with an increase of 1.1 percent. The increase follows a significant decline in October, which, according to new data, was slightly steeper than initially expected at 3.8 percent.
On Friday, the US stock markets ended a mixed week on a positive note. The Dow Jones index of standard stocks closed 0.1 percent higher at 37,466 points. The broader S&P 500 advanced 0.2 percent to 4,697 points. The Nasdaq technology exchange index gained 0.1 percent to 14,524 positions. However, on a weekly basis, all indices posted losses in the first trading week of the year, especially the Nasdaq 100.
Economic concerns put pressure on the stock markets in the Far East at the beginning of the week. Above all, weak confidence in the Chinese economy weighed on sentiment. The index of the most important companies in Shanghai and Shenzhen lost more than one percent, falling to its lowest level in around five years. The Shanghai stock exchange also fell by more than one percent. In Japan, markets remained closed for a public holiday.
The euro is trending sideways in early forex trading. The European common currency is currently trading at $1.0944. Meanwhile, the lower expectations of interest rate cuts are weighing on the price of gold. A troy ounce of gold costs $2,031 this morning, 0.6 percent less.
Oil prices started the week with losses. A barrel (159 liters) of North Sea Brent for delivery in March costs $77.91 this morning, 1.0 percent less. Stock marketers justified the price losses by saying that Saudi Arabia has lowered the official sales prices for all regions. This underlines the deteriorating global outlook for oil demand.
Qiagen shares in the DAX could be worth a look today. The diagnostics company wants to return up to 300 million dollars (equivalent to 273 million euros) to its shareholders from the end of January. The company is using a so-called synthetic share buyback, as Qiagen announced yesterday evening.
The nominal value of the shares is increased by converting part of the capital reserve and, in the next step, reduced back to the previous value by merging shares. The money released can – like a dividend – be distributed directly to the shareholders. Mathematically, the targeted volume results in an amount of around 1.20 euros per share.
In view of the new austerity measures at Volkswagen, IG Metall is preparing for difficult collective bargaining. “We have to prepare for a tough dispute that has been washed away,” said the district manager for Lower Saxony and Saxony-Anhalt, Thorsten Gröger, to the German Press Agency with a view to the collective bargaining round at Europe’s largest car manufacturer that is due to take place in the second half of the year.
Biotech company Evotec receives a milestone payment of $25 million from its partner Bristol Myers Squibb. Evotec has made significant progress in its cooperation with the US group, which triggered the performance-based payment, the company announced today. The cooperation focuses on neurodegenerative diseases and has existed since 2016; in May 2022 it was extended and expanded for a further eight years.
A buy recommendation from the Swiss bank UBS is providing tailwind for Carl Zeiss Meditec. UBS analyst Graham Doyle sees the medical technology company at a positive turning point in growth. He raised the price target from 89 to 125 euros and therefore upgraded the shares from “Neutral” to “Buy”. The company offers one of the best growth stories in the sector.
After the anger surrounding cases of theft and fraud at the Hamburg copper group Aurubis, the board of directors and supervisory board are not yet to be discharged at the upcoming general meeting. The Executive Board and the Supervisory Board propose to postpone the resolution on the discharge of the members of both bodies, as can be seen from the invitation to the online shareholder meeting on February 15 published on Friday
The French electricity company EDF is pushing ahead with plans for a recycling plant for low-level radioactive scrap at its Fessenheim site in Alsace. An EDF spokeswoman said on request that the public in neighboring Germany should also be involved in the multi-stage approval process. In Germany there are concerns about the industrial project.
After a cabin section including a window was torn off during a flight, the US Federal Aviation Administration (FAA) has ordered a temporary take-off ban for more than 170 Boeing 737-9 Max aircraft. The authority announced on Saturday that immediate inspections of certain examples of this model were necessary, each taking around four to eight hours. Only then could the jets go back into operation.
The world’s most important technology trade fair CES in Las Vegas starts today with a media day. Among the companies presenting their innovations at the start are the electronics giants Samsung, LG and Sony as well as the German Bosch Group. One of the trends this year is the greater influence of software with artificial intelligence, which is used, among other things, to improve the image in televisions.