market report
After four days of losses, the DAX started the last trading day of the week with slight gains. Strong company figures give impetus. The bottom line is that a minus should remain from a weekly perspective.
The losses on the German stock market seem to have been contained for the time being on Friday. The DAX starts at 15,894.57 points with a minimal increase of 0.01 percent. On a weekly basis, the leading German index was down 3.5 percent on the previous day’s close. It has lost more than 600 points since its record high on Monday. Profit-taking and a downgrading of the USA’s creditworthiness by the rating agency Fitch had a negative impact.
“The linchpin is the yields on ten-year US Treasury bonds,” said Jochen Stanzl, chief analyst at broker CMC Markets. After eleven interest rate increases in a row by the US Federal Reserve, they have cleared the important hurdle of four percent. Due to Fitch’s rating decision, they have now risen again. This development is causing unrest on the stock market. “Investors fear that losses in investments could lead to new bank failures, as we have already seen with the Silicon Valley Bank. The fear of another banking crisis is growing.”
The Dow Jones index of standard values closed yesterday 0.2 percent lower at 35,215 points. The tech-heavy Nasdaq fell 0.1 percent to 13,959 points. The broad S&P 500 lost 0.3 percent to 4501 points. “The downgrading of the credit rating is certainly a damage to the image of the USA. However, we do not see the position of the US dollar as a global reserve currency or the fundamental attractiveness of US government bonds being endangered by the lower rating,” said Carsten Klude, manager at the Hamburg private bank MM Warburg.
However, the uncertainty following the downgrade initially prompted investors to throw the government bonds out of their portfolios. The yield on 10-year US bonds rose to 4.185 percent from 4.078 percent on Wednesday in return for the falling price. This can also be attributed to the surprisingly strong job growth in the US private sector in July, said Ulrich Stephan, chief strategist at Deutsche Bank.
The futures of the major US stock market indices are pointing upwards, and strong quarterly figures from the US tech giants should provide an upswing. In the opinion of the analysts at Helaba, in addition to the company reports, the focus today is on the US labor market report, because it “has an impact on the monetary policy outlook of the US Federal Reserve Bank. The monetary authorities will probably have to wait for the restrictive monetary policy to cool down noticeably on contributes to the labor market.”
The exchange rate of the euro changed little today ahead of important economic data from the USA. In the morning, the shared currency was trading at $1.0948, the same level as the previous evening. The European Central Bank (ECB) last set the reference rate at $1.0932 on Thursday afternoon. The euro was thus able to stabilize shortly before the weekend. During the week, dollar strength had put pressure on the common currency, and the rate slipped below $1.10.
Saudi Arabia, meanwhile, extended its one-million-barrel-per-day oil production cut for a month. The prices then shot up. The North Sea crude oil variety Brent and the light US variety WTI rose by about two and a half percent to 85.31 and 81.76 dollars per barrel respectively. The reduction initiated in July will now apply until September, it said in a statement released by state-run Saudi Press Agency on Thursday. In addition, a further extension or an expansion of the reduction is possible.
The rise in interest rates in the euro area gave Commerzbank’s profit a strong boost in the spring. The financial group based in Frankfurt generated a group profit of 565 million euros in the second quarter, an increase of 20.2 percent within the year, as the DAX group announced today. Analysts had expected less. Income before risk provisions increased by 8.7 percent to EUR 2.63 billion. Nevertheless, CEO Manfred Knof still expects consolidated profits for the year as a whole to be well above the previous year’s figure of 1.4 billion euros. In the first half of the year alone, the bank earned almost 1.15 billion euros. Nevertheless, the share led the line of losers at the start of trading and slipped more than two and a half percent into the red.
Closely followed by the shares of Vonovia, which also start trading with a loss of almost two and a half percent. Germany’s largest residential real estate group Vonovia also suffered a loss in the billions in the second quarter. The bottom line was a loss of a good two billion euros due to another devaluation of the real estate portfolio, as the DAX group announced today in Bochum. In the same period last year, Vonovia reported a profit of EUR 1.8 billion. The value of the rental portfolio was around 88.2 billion euros at the end of June, it said. At the end of March, the properties were still valued at 91.2 billion euros and at the end of 2022 even at 94.7 billion euros.
In the US, after the US stock market closed, two heavyweights opened their books: Apple and Amazon. The Internet retailer earned significantly more than expected in the past quarter thanks to a recovery in online trading and austerity measures. The world’s largest online retailer posted a profit of 6.7 billion dollars (6.1 billion euros). That was almost double what analysts were expecting. Amazon lost $2 billion in the same quarter last year. The stock rose 9 percent in after-hours trading.
Apple, on the other hand, cannot escape the general downturn in smartphones and computers – but the spending of hundreds of millions of customers on digital offers is cushioning the declines. In this way, the group can remain highly profitable even if it sells fewer iPhones and iPads. Apple’s consolidated revenue fell 1.4 percent year-on-year to $81.8 billion. Bottom line, however, profits rose to around $19.9 billion from $19.44 billion a year earlier. The share of the most valuable company in the world with a market value of around three trillion dollars fell almost three percent in after-hours trading.