market report
The DAX recorded slight price losses in the middle of the week. Disappointing trade data from China are dampening the mood to buy, but the prospects for the German economy are anything but rosy.
The DAX continues to work its way down to the 16,000 point mark in the middle of the week, the preliminary daily high is just one point below it. After all: The leading German index was able to clearly break away from its daily low of 15,909 points by the early afternoon.
Disappointing economic data from China and Germany are dampening the buying mood on the stock market. But investors can’t bring themselves to take profits on a larger scale either. “The German share index is in a deep sleep phase. The volatility continues to decrease. At the 16,000 mark, almost nothing goes in either direction,” states Jürgen Molnar, capital market strategist at broker RoboMarkets.
In May, China’s exports fell surprisingly sharply by 7.5 percent – experts see this as a sign of how much the global economy is currently weakening. German industrial groups were also disappointing, producing only 0.3 percent more in April than in the previous month. Economists had expected an increase of 0.6 percent here.
Weak industry and interest rate hikes in recent months are likely to have a significant impact on economic output in the second half of the year. The OECD does not expect the German economy to grow this year, but only again in 2024. The Hamburg Institute for the World Economy (HWWI) even expects a decline in economic output of 0.5 percent this year.
Investors will continue to focus on the central bank meetings of the Federal Reserve and the European Central Bank next week. According to director Isabel Schnabel, the ECB still has to raise interest rates. Since there is great uncertainty about the duration of the inflation wave, it is better to do too much than too little when weighing up the interests, she told the Belgian newspaper De Tijd. “We still have more to do.” According to experts, the Governing Council of the ECB will decide on the eighth consecutive interest rate hike next week, while the US central bank is likely to take an interest rate pause.
The guesswork about the Fed’s future course is likely to keep US stock markets in check. Wall Street is off to a slow start. The futures on the leading index Dow Jones are currently trading almost unchanged, and the futures on the S&P 500 and Nasdaq 100 are hardly moving.
The Turkish lira is falling more than it has been in two years. In contrast, the dollar and euro rose by around seven percent each to record highs of 23.041 and 24.618 lira respectively. Market observers suspect that the Turkish central bank has reduced its interventions to artificially stabilize the domestic currency after President Erdogan was re-elected.
After initial losses, the euro turned positive. The European common currency is currently trading at 1.0713 dollars. The ECB set the reference rate at $1.0683 yesterday afternoon. An ounce of gold is currently trading at $1963.
After the significant surcharges at the start of the week, oil prices can continue to rise in the middle of the week. A barrel (159 liters) of North Sea Brent for delivery in August costs $77.17. That is 1.1 percent more than the day before.
The biggest winner in the DAX at midday is the E.ON share. The President of the Federal Network Agency, Klaus Müller, wants to grant network operators higher returns on their investments. The interest on equity for this will increase from 5.07 to 7.09 percent in 2024, Müller told the “Handelsblatt”. Analyst Alberto Gandolfi of Goldman Sachs commented on this prospect with “big positive”. He calculated an additional pre-tax profit of around 150 million euros for E.ON by 2027.
There is also positive news for the German car manufacturers VW, BMW and Mercedes-Benz: The ramp-up in the Chinese car market accelerated further in May. 1.76 million vehicles were delivered to retailers, according to the PCA (Passenger Car Association) based on preliminary data. This corresponds to an increase of 30 percent compared to the same period last year.
Rheinmetall plans to deliver more tanks and anti-aircraft ammunition to Ukraine this summer. The armaments company has received an order from the Federal Ministry of Defense for 20 Marder infantry fighting vehicles. How much the tanks cost remains vague. We are talking about a mid-double-digit million euro amount.
In the MDAX, titles from Hugo Boss lead the list of winners with a premium of almost four percent. The Swiss bank UBS has issued a buy recommendation for the shares in the fashion group. “Hugo Boss is back in fashion,” headlined analyst Susy Tibaldi. Although the trend reversal at the fashion manufacturer is still in its infancy, the margin potential is being overlooked.
Morphosys shares know no stopping: The papers of the antibody specialist gain double digits in the middle of the week and after an increase of 123 percent since the beginning of the year, they climb to their highest level since the beginning of 2022. A week ago, UBS analyst Xian Deng had the papers with a price target of 47 euros Purchase recommended. However, they only really took off this Monday after successfully bottoming out above the highs of the past few months.
The laboratory outfitter Stratec has expanded its US business through a takeover. The SDAX-listed company is acquiring Natech Plastics, a supplier with customers in medical technology, in-vitro diagnostics, life sciences and consumer goods, for a transaction price of USD 30 million. From 2024, a “neutral to slightly positive effect” can be expected from the takeover, it said.
The biggest winner in the leading index of the eurozone, the EuroStoxx50, is the Inditex share. The Zara parent company can continue to defy the general slump in consumption. Sales and operating profit rose sharply in the first fiscal quarter through the end of April. The new summer collections are said to be well received by customers, so business has been good in the past few weeks. Analysts were enthusiastic.
The US consumer protection agency CPSC has accused Facebook of offering dangerous baby pillows on its sales portal. The pillows, which are linked to the deaths of ten children, could be found by the thousands on Facebook Marketplace, even after the manufacturer Boppy Co. withdrew them in September 2021, the authority wrote to the head of Facebook parent Meta, Mark Zuckerberg.
The steel and processing group Voestalpine achieved record sales and operating results in the past 2022/23 financial year (as of the end of March). The bottom line, however, fell by 11.4 percent to 1.2 billion euros. Nevertheless, the shareholders are to receive a dividend of EUR 1.50 per share, which is 30 cents higher.
The US aircraft manufacturer Boeing has identified a new defect in its 787 Dreamliner long-haul jet, which was plagued by a series of production breakdowns. Boeing is currently investigating a number of aircraft not yet handed over to customers that may require rework prior to delivery. According to the current state of knowledge, however, the problem is not acutely relevant to safety and should initially not change anything in the delivery target for the year as a whole.
The US Securities and Exchange Commission has sued Coinbase, another major trading platform for digital currencies such as Bitcoin. Coinbase has offered for trading crypto assets that the SEC classifies as securities and which should have been registered by the company as such, according to the lawsuit filed in court in New York yesterday. Coinbase operates an illegal US securities trading exchange while also performing certain other financial services without the necessary licenses.