The hope of interest rate cuts next year continues to fuel the DAX rally of the past few days today. However, today’s consumer prices in the Eurozone are likely to play a role.
The DAX is likely to increase further today: The broker IG estimates the leading German index 0.3 percent higher to 16,220 points before the start of trading. The November rally on the German stock market continued yesterday. Hopes of interest rate cuts soon pushed the DAX to its highest level since the beginning of August. The leading index passed the 16,200 point mark for the first time in almost four months, but closed slightly lower with a premium of 1.1 percent at 16,166 points.
“November is almost over, and it has been the second best month for the German stock index so far this year, only surpassed by January, when the index gained a good nine percent,” commented Konstantin Oldenburger, market analyst at CMC Markets.
After yesterday’s German inflation data, Eurozone data is expected at 11 a.m. today. They could continue to drive the market: “Core inflation could slip below the 4 percent mark for the first time since June 2022. Against this background, there is no reason to withdraw the interest rate cut expectations regarding the ECB,” write Helaba experts in their daily commentary.
However, mixed signals from US monetary authorities about the Fed’s future monetary policy have caused reluctance on Wall Street. The Dow Jones index of standard stocks closed slightly higher at 35,430 points. The technology-heavy Nasdaq fell 0.2 percent to 14,258 points. The S&P 500 lost 0.1 percent to 4,550 points.
A certain lack of clarity about the future interest rate policy of the US Federal Reserve caused dissatisfaction. Richmond Fed District President Thomas Barkin weighed in on the issue in a CNBC interview: As for rate cuts next year, it’s “premature” to even talk about it, he said. He is skeptical that the decline in inflation towards the inflation target of two percent will proceed smoothly.
On the futures markets, bets for a first rate cut in March 2024 rose to 46.4 percent compared to 34.6 percent the previous day, according to data from the CME exchange.
The Japanese stock index Nikkei closed in the morning with an increase of 0.5 percent to 33,487 points. The markets in China were initially unimpressed by the recent poor economic data: the official Purchasing Managers’ Index (PMI) fell to 49.4 in November from 49.5 in October. The Shanghai stock exchange gained 0.2 percent. The index of major companies in Shanghai and Shenzhen gained 0.2 percent.
A mega merger in the healthcare industry could be imminent in the USA. The two industry giants Cigna and Humana are in negotiations about a merger, reported the Wall Street Journal. A merger would have enormous dimensions and would catapult the two into the upper league of integrated healthcare providers. Cigna currently has a market capitalization of around $83 billion, Humana at a good $62 billion.
SAP rival Salesforce exceeded market expectations last quarter. The cloud business software specialist’s sales rose by eleven percent year-on-year to $8.72 billion. The bottom line is that profits jumped from $210 million a year ago to $1.22 billion. Salesforce specializes in customer management software and also offers, among other things, the acquired office communication service Slack.
The technology group ABB has set itself somewhat more ambitious financial goals. In the future, the Swiss want to grow by “5 to 7 percent annually over the economic cycle” on a comparable basis. To date, ABB has targeted annual sales growth of an average of 4 to 7 percent on a comparable basis. A value between 16 and 19 percent is targeted for the operating profit margin (Ebita margin). Previously, the target was “at least 15 percent” from 2023.