market report
The subdued interest rate expectations pushed the DAX to a new low for the year at the start of trading. The leading index fell to its lowest level since the end of November. This means that the downward trend on the stock market continues.
The mood on the German stock market remains weak. The DAX started 1 percent lower and fell to a new low for the year of 16,403 points. Since the beginning of the year, subdued expectations of imminent interest rate cuts in the USA combined with mixed economic data have caused disillusionment on the markets – and thus falling prices.
The pessimism was reinforced again yesterday evening by a speech by US Federal Reserve Director Christopher Waller at the World Economic Forum in Davos. His comments that rate cuts would be methodical and cautious signaled that the Federal Reserve was in no rush, said analyst Michael Hewson at broker CMC Markets UK. In addition to weakly received business figures from the banking sector, this clouded the mood on Wall Street yesterday, with the US leading index Dow Jones falling 0.6 percent.
These negative guidelines are weighing on the DAX in the middle of the week. Yesterday, the German stock market barometer had already continued its losses from the previous day and closed with a loss of 0.3 percent. Since the beginning of the year, it has lost just over 1.6 percent – after a partly downright euphoric rally in the fourth quarter of 2023, which was driven by great hopes of lowering interest rates. The DAX is now at its lowest level since the end of November.
More speeches in Davos are in the spotlight for investors today. Statements from ECB boss Christine Lagarde in the afternoon are likely to be particularly important. At a panel, the monetary watchdog will address the question of how economic growth can be secured in the long term in the face of ongoing tensions.
Meanwhile, economic concerns in Germany continue: German industry’s order backlog thinned for the fifth month in a row in November. The order backlog fell by 0.7 percent compared to the previous month, as the Federal Statistical Office announced. There was a decrease in open orders both from home and abroad. Compared to the same month last year, there was even a decline of 5.7 percent.
“The order backlog continues to melt away, and with it the chance of an economic recovery,” explained the chief economist at the private bank Hauck Aufhäuser Lamp, Alexander Krüger. Because new business had recently weakened: it was 4.5 percent lower from September to November 2023 than from June to August.
The Chinese economy is also moving to the fore in the financial markets. “Investors are sensitive to Chinese economic growth,” said Thomas Altmann, portfolio manager at asset manager QC Partners. The Chinese economy narrowly missed analysts’ expectations in the fourth quarter due to ongoing weakness in the real estate sector despite growth of 5.2 percent.
The second largest economy also grew by 5.2 percent for the year as a whole. Meanwhile, the real estate market remains under pressure and people’s spending mood is weakened.
The Chinese stock exchanges reacted sniffily. The CSI 300 with the most important values from the trading centers in Shanghai and Shenzhen recently lost 2.2 percent, the Hang Seng Index of the Hong Kong Special Administrative Region fell by almost four percent. Nevertheless, Chinese stocks should not be written off, noted investment strategist Ulrich Stephan from Deutsche Bank. “In my opinion, it would be a mistake to extrapolate the current cautious mood for the next few years and to refrain from investing,” said Stephan.
Things looked a little better in Japan. The Nikkei 225 lost 0.4 percent. In Australia there was also only a slight decline. The S&P/ASX 200 fell 0.29 percent.
The euro remains under pressure. In the morning, the common currency hit its lowest level in almost a month at $1.0858. It has been weighed down by a stronger dollar for several days. The US currency is benefiting from doubts about rapid interest rate cuts by the Fed.
During the course of the day there will be some economic data that could cause price movements on the financial markets. In the morning, the statistical office Eurostat publishes inflation data for the euro zone, but these are only detailed data. In the afternoon, retail sales figures are expected in the USA, among other things, which provide information about important private consumption.
In view of the disappointing economic data from China, oil prices are also falling today. As a result, investors fear weak demand from the world’s second largest crude oil consumer. Brent crude from the North Sea fell by 0.9 percent to $77.61 per barrel. The price of US light oil West Texas Intermediate (WTI) falls by one percent to $71.70.
The appreciating dollar has also been putting pressure on the oil market for a few days now. Gains in the US currency are making crude oil traded in dollars more expensive for many interested parties. As a result, demand decreases, which in turn puts pressure on prices.
In Great Britain, inflation rose slightly at the end of the year for the first time in several months. The inflation rate was 4.0 percent in December after 3.9 percent in the previous month of November, as the ONS statistics office announced. Analysts, however, had on average expected a decline to 3.8 percent. The general price increase last increased in February 2023. On a monthly comparison, consumer prices increased by 0.4 percent at the end of the year, the ONS also announced. This increase was also higher than experts expected.
The food delivery service Just Eat Takeaway expects a better operating result for the past year than previously expected, despite continued weak North American business. The Lieferando parent now expects adjusted earnings before taxes, interest and depreciation of 320 million euros for 2023, as the company announced. That is another ten million euros more than the previous increase in the forecast in October.
The car manufacturer Renault sold significantly more cars last year compared to the weak previous year. The French got rid of 2.24 million vehicles worldwide, nine percent more than in the previous year. In 2022, delivery difficulties for individual parts such as electronic chips had a severe impact on sales. When it comes to passenger cars, the group and all its brands (including Renault, Dacia, Alpine) achieved an increase of almost seven percent to 1.84 million cars worldwide.
Nokia wants to invest a total of 360 million euros at the Ulm and Nuremberg locations, primarily in chip design. The major investment will take place over a period of four years as part of the European IPCEI program (Important Projects of Common European Interest), which is funded by the federal government as well as Baden-Württemberg and Bavaria. The project primarily aims to develop chips for radio and optical products that will be used in future mobile communications systems (5G Advanced and 6G).
The British oil company BP has a new boss. The board of directors has appointed interim boss Murray Auchincloss as permanent BP boss with immediate effect, the British announced. Auchincloss, who has been leading the oil company on an interim basis since September, will remain a member of the board of directors. In September, former BP boss Bernard Looney resigned with immediate effect because of past relationships with colleagues.
The Austrian oil field supplier Schoeller-Bleckmann (SBO) achieved record sales and increased its profits in the past financial year despite a weaker US market. Sales climbed by 17 percent to 585 million euros and operating profit (EBIT) increased to 104 million euros from 96.2 million euros, the company announced. Profit before taxes rose to 95 million euros after 93.3 million euros. In the previous year, a one-time expense item in the financial result had a negative impact on the result.