market report
After a five-day winning streak, investors are taking it easy at the end of the week. The US accounting season, which starts today, could provide impetus for further price gains.
The DAX started the last trading day of the week with a minus of 0.1 percent to 16,123 points. The leading German index continued its recovery rally yesterday and closed 0.7 percent higher at 16,141 points. Not only did he record the fifth consecutive day of profits, but he also made up for the previous four-day losing streak.
A test of the interim high from the beginning of July at 16,207 seems possible, according to Helaba’s daily outlook. “Courses above that would open up potential up to 16,427. Support can be found in the area of the average lines around 15,960 and then at 15,800,” according to the experts’ assessment. Given the recent winning streak, it wouldn’t be surprising if some market participants decided to take profits.
The mood on the stock exchanges is already dangerously positive, stated Thomas Altmann from QC Partners. The optimism was fueled by the surprisingly significant drop in US inflation. Altmann believes that how things will continue in the coming weeks could depend above all on the reporting season.
Big banks Wells Fargo, Citigroup and JPMorgan are the first in the financial industry to open their books. The picture is likely to be mixed. On the one hand, the institutes are helped by the higher interest rates, since customers have to pay more for their loans. On the other hand, the demand for loans is also flagging. In addition, the lucrative business for banks with takeovers, mergers and IPOs has declined. Wells Fargo and JPMorgan will report at 12:45 p.m., followed by Citigroup at 2 p.m.
Andreas Hürkamp, analyst at Commerzbank, expects the company balance sheets to be rather weak overall in the second half of the year: “We assume that there will be more and more negative earnings revisions in the course of the second half of the year, so that the expected earnings growth for the DAX, Euro Stoxx 50 and S&P 500 should both fall towards minus 5 percent.” According to Hürkamp, these negative earnings revisions are an important reason why Commerzbank expects a consolidation of the stock markets in the coming months after the strong first half of the year.
On Wall Street, the Dow Jones closed 0.1 percent higher at 34,395 points yesterday. The tech-heavy Nasdaq advanced 1.6 percent to 14,138 points. The S&P 500 gained 0.8 percent to 4510 points.
In June, US producer prices rose only minimally by 0.1 percent compared to the same month last year. After the small increase in consumer prices, this is further confirmation that inflation is beginning to ease, said Peter Cardillo, chief financial markets economist at Spartan Capital Securities. David Russell of broker TradeStation said, “Investors are now at a point where they’re saying, ‘Let’s focus on company results.’
Investors in the Japanese stock market exercised caution at the end of the week. Investors are waiting for the outcome of the Japanese central bank meeting and the course of the upcoming reporting season, says Jun Morita of Chibagin Asset Management. The Nikkei hit water at 32,391 and the broader Topix lost 0.2 percent. The Bank of Japan (BOJ) holds its two-day meeting at the end of July.
In China, speculation about imminent government measures to stimulate the economy supported the stock exchanges. Recently, Chinese economic data had been weak. The Shanghai Composite advanced 0.2 percent, while the index of major companies in Shanghai and Shenzhen gained 0.1 percent.
The euro continued the gains of the past few trading days on Friday and reached its highest level in almost a year and a half. The common currency continued to benefit from a weakness in the US dollar, which is suffering from speculation that interest rates in the USA will rise less sharply. In the morning, the euro rose as high as $1.1243. The price was last this high in February 2022. Over the course of the week, the euro has gained more than two percent in trading against the dollar.
Oil prices did not move much on Friday. In the morning, a barrel (159 liters) of North Sea Brent for delivery in September cost 81.36 dollars, which is the same as the previous evening. The price of a barrel of American grade West Texas Intermediate (WTI) for August delivery rose slightly by two cents to $76.91.
In the past few trading days, however, the prices had risen sharply. The price of crude oil from the North Sea has risen by more than three dollars a barrel since Monday. Since crude oil is traded in US dollars on the world market, weakness in the US currency makes the commodity cheaper in non-dollar countries, which increases demand and supports prices.
According to Mercedes Technical Director Markus Schäfer, the electric car market in China is currently highly competitive in the volume segment. “The price war in China is particularly dramatic in the volume segment,” said Schäfer during an online discussion at management consultancy PwC. Even the traditional Chinese state manufacturers BAIC and SAIC, joint venture partners of Mercedes-Benz and Volkswagen, are struggling in the market currently managed by BYD.
Mercedes-Benz itself is focused on the premium and luxury segment, but the brand’s market share in the rapidly growing Chinese e-car market is “vanishingly small”. Including combustion models, the Swabians would have a ten to twelve percent share in their segment.
The perfumery group Douglas could return to the stock market in the coming year. “Private equity companies like our main shareholder CVC usually plan with a time horizon of five to seven years before they get out again,” said Douglas boss Sander van der Laan of the “Rheinische Post”. “CVC has been involved with Douglas since 2015 and is therefore probably in the second phase of the investment if you deduct the Corona years.” Douglas was taken off the stock exchange in 2013 after a takeover bid by the financial investor Advent and the Kreke family, and in 2017 the majority was sold to the private equity company CVC.
The telecoms supplier Nokia is struggling in the face of inflation and rising interest rates with its customers’ reluctance to invest. The Finns must therefore stack lower with a view to their annual goals. Both the economic outlook and ongoing destocking resulted in weaker demand. Both sales and margin targets were lowered.