market report
It is not yet clear whether the German stock market can stabilize after the price slide of the past few days. After all, the pressure to sell has decreased significantly. Wall Street is also currently paused.
There is nothing left of the morning’s price gains. The DAX is currently a few points in the red. In the previous two days, the German stock market barometer had lost 1.0 percent each.
After all, the great downward momentum of the past few days has noticeably reduced in the middle of the week. But can investors really breathe a sigh of relief? Market observers are skeptical and point to the significantly clouded chart technology.
By breaking through its central support zone, the DAX has opened up further downward potential; it could now go down to 14,500 points. Conversely, if the DAX manages to regain its 200-day line (currently at 15,588 points), prices could stabilize sustainably.
Another prerequisite for the stock markets to recover would be to stop the rapid rise in yields. In the USA, the yield on ten-year government bonds climbed to a 16-year high yesterday. This makes stocks less attractive compared to bonds.
Bond yields in this country also have further upward potential, as some representatives of the European Central Bank (ECB) are not ruling out a further interest rate increase in the fight against high inflation. One cannot “necessarily” say that the latest phase of interest rate increases in the euro zone has already reached its peak, ECB Director Frank Elderson told the news agency Market News International.
Tailwind for the DAX comes from the overseas stock exchanges in the middle of the week. The Chinese stock exchanges benefited from robust economic data in the morning. The New York stock exchanges opened with slight surcharges. Half an hour after the start of trading, the leading index Dow Jones Industrial Average was trading 0.1 percent higher.
US industry surprisingly received more orders in August. Orders for durable goods such as aircraft and machinery grew by 0.2 percent compared to the previous month. Economists surveyed by Reuters, however, had expected a decline of 0.5 percent, after a sharp decline of 5.6 percent in July.
The increased US interest rate expectations continue to strengthen the dollar. In return, the euro continues to weaken and falls to $1.0526. The European common currency has not been this low since March. A troy ounce of gold currently costs $1,888.
Despite the strong dollar, oil prices extended their premiums from the previous day. In the afternoon, a barrel (159 liters) of North Sea Brent for delivery in November costs $93.84 – an increase of more than one percent. Oil prices are therefore not far from their recent highs since last November.
The weakest DAX value of the current year is still under pressure in the middle of the week: Zalando shares are now down 37 percent in 2023. The online retailer’s shares are getting closer and closer to the previous year’s low of 19.18 euros. This threatens to return to the prices of the first hour of 2014 at around 17 euros. Citigroup analyst Monique Pollard’s negative outlook for the quarterly report at the beginning of November is providing additional pressure today.
There is a risk of further cuts at the Zwickau Volkswagen plant. According to information from the German Press Agency, management terminated the company agreement on three-shift operation from 1991 at the end of the year. Just a day earlier, it was announced that VW would cut production at its Zwickau electric car factory for two weeks at the beginning of October due to weak demand. A production line should come to a complete standstill.
In connection with possible diesel emissions fraud, numerous investors are demanding millions in damages from Mercedes-Benz – now the test case begins. The 20th Civil Senate of the Higher Regional Court will hear the lawsuit for the first time today. The first day of negotiations is therefore planned as an organizational date. Among other things, the structuring of the proceedings should be discussed with the parties.
With its takeover offer for the software provider Suse, the financial investor EQT has been offered the majority of the shares not yet held. EQT previously had around 79 percent of the shares, but the takeover offer has now added 19.2 percent, as the companies announced in the afternoon. Overall, the Swedish financial investor has 98.2 percent of the shares. Shareholders receive an interim dividend of 3.20 euros per paper. The takeover offer is scheduled to be completed on October 4th. EQT wants to take Suse off the stock exchange due to business problems and had offered 16 euros per share after the stock fell. Investors also have the option of remaining invested in the company as minority owners. In May 2021, EQT raised 30 euros per share when the Linux specialist went public.
In the SDAX, the KWS Saat share was the biggest winner in the afternoon. Due to good business in all segments, the seed manufacturer exceeded expectations for the past financial year. The company increased its sales by 18 percent to 1.82 billion euros. The bottom line is that 127 million euros remained as profit, from which KWS Saat plans to pay its shareholders a dividend of 90 cents after 80 cents in the previous year.
According to a report, the IPO of the pharmaceutical company Schott Pharma is generating great interest among investors. The issue price is expected to be 27 euros, as the Bloomberg news agency reported with reference to a key data paper available to it. This is in the upper half of the offer range of EUR 24.50 to EUR 28.50 per share set by Schott Pharma. The registered demand exceeds the supply.
The continued high inflation has left its mark on the Hornbach hardware store group. With sales almost unchanged at 1.67 billion euros, the Hornbach Group’s adjusted operating profit (EBIT) fell by 13.3 percent to 111.9 million euros in the second quarter. Erich Harsch, head of Hornbach Baumarkt AG, spoke of a “certain reluctance on the part of consumers”.
The ceramics manufacturer Villeroy & Boch will have a CEO, Gabi Schupp, at the beginning of next year. The supervisory board appointed her to the position. Schupp will succeed CEO Frank Göring. For the past five years, Schupp has been responsible for the “Dining and Lifestyle” division, which includes dishes, glasses and cutlery.
The withdrawal from the Russian business and the unusually warm September weather in many important European countries are weighing on the fashion retailer H&M. Sales in September, adjusted for currency effects, will be around ten percent below the level of the same period last year, the group announced in Stockholm.
The US competition authority FTC has filed another lawsuit against the online giant Amazon. The Federal Trade Commission (FTC) is now targeting the US company’s “marketplace business” and accusing it of having a monopoly position. The antitrust lawsuit by the FTC and 17 US states was filed in federal court in Seattle, the agency said.
According to a media report, ChatGPT operator OpenAI is talking to investors about a possible share sale that could value the AI developer at $80 to $90 billion. It is expected that employees could sell their existing shares instead of the company issuing new shares to raise additional capital, the Wall Street Journal reported, citing people familiar with the matter.
The French supermarket chains Carrefour and E.Leclerc want to sell fuel cheaper soon. From Friday onwards, fuel will be offered at the filling stations of their wholesale markets every day at cost price, i.e. without profit. The companies announced this yesterday on the online platform X, formerly Twitter. Given the high cost of living, the French government had previously put pressure on providers.
US President Joe Biden has demonstratively supported the striking workers in the auto industry and backed their demand for 40 percent more wages. “You deserve what you deserve,” he said yesterday outside a General Motors distribution center in Belleville, Michigan. “And you deserve a hell of a lot more than you’re getting now.”
The booking platform Airbnb does not expect any major problems due to the restrictions on its activities in New York. The US metropolis is “only a small part” of the business and, like many other cities, “has already become less and less important” during the pandemic, Airbnb co-founder Nathan Blecharczyk told the “Süddeutsche Zeitung”. New York recently banned rentals for less than 30 days.
According to a report by the Bloomberg news agency, the health shoe manufacturer Birkenstock wants to start the subscription period for its IPO in New York next week. Birkenstock wants to begin the official advertising tour for the issue on October 2nd, during which the traditional company from Linz am Rhein could be valued at around ten billion dollars.