market report
Despite great guidance from Wall Street, the DAX fell slightly in early trading. After yesterday’s record high, the bulls still have a clear advantage, with the 18,000 point mark still tempting.
The DAX cannot initially repeat its strong performance from the previous day. The leading German index starts the last trading day of the week almost unchanged, trading at 17,849 points at the start of trading on XETRA. The German stock market barometer turned negative in the first few minutes of trading. The day before, interest rate cut speculation had pushed the DAX to a new record high of 17,879 points; at the close of trading it was up 0.7 percent.
With its new record high, the DAX has entered new chart territory – or “uncharted territory”, as experts say. Of course, resistance in the form of old high points cannot be found here. A record high is therefore considered one of the best buy signals that technical analysis has to offer.
The upward trend in the DAX is still intact, which gives hope for new highs. The next milestone for the DAX bulls is now the round mark of 18,000 points.
The DAX buyers see themselves encouraged by the latest signals from the European Central Bank the day before. Yesterday the ECB revised its forecasts for the economy and inflation downwards and now sees the inflation rate at an average of two percent as early as 2025.
This paved the way for a possible first interest rate cut in June. In any case, this meeting has increased the likelihood that the ECB will lower interest rates for the first time before the FED, commented Johannes Mayr, chief economist at asset manager Eyb & Wallwitz.
There were mixed signals from the German economy this morning. German industry increased its production in January by 1.0 percent compared to the previous month. However, the development in December was weaker than previously known at minus 2.0 percent. In a less fluctuating three-month comparison, development up to January was weak.
“The trend in production continues to point downwards, and given the recent weak development of incoming orders, this is unlikely to change for the time being,” explained Commerzbank economist Ralph Solveen.
On the other hand, the specifications from Wall Street are impressive: the market-wide S&P 500 and the technology selection index Nasdaq 100 reached new record levels the evening before. Jerome Powell’s statements before the US Congress put people in a good mood. The chairman of the US Federal Reserve left the timing of an easing of monetary policy open, but emphasized that the monetary authorities had this important change in monetary policy on their radar in 2024.
The Dow Jones index of standard stocks closed 0.3 percent higher at 38,791 points. The technology-heavy Nasdaq advanced 1.5 percent to 16,273 points. The broad S&P 500 gained one percent to a record close of 5,157 points.
At the end of the week, the focus is once again on monetary policy. In the USA, the government will publish its monthly labor market report in the afternoon, which has a significant impact on the stance of the Federal Reserve.
Many observers see wage developments in particular as a decisive factor influencing future monetary policy. So far, according to many economists, the robust labor market argues against a rapid interest rate cut, which is not expected until the middle of the year.
Mixed signals are coming from the Asian stock exchanges at the end of the week. The Japanese Nikkei index, which includes 225 values, ended the weekend with an increase of 0.2 percent to 39,689 points. The strength of the yen, which strengthened against the dollar for the fourth day in a row, was also a drag, posing a potential burden for export-oriented companies.
Things looked better in China, however. The Hang Seng Index of the Hong Kong Special Administrative Region rose by 1.1 percent points. The CSI 300 with large stocks from the trading centers in Shanghai and Shenzhen recently rose by 0.4 percent.
In the foreign exchange market, investors are letting the dollar fall in anticipation of interest rates in the USA falling soon. The dollar index has lost a good one percent on a weekly basis as of this morning. Things are looking up for the euro, however. At up to $1.0955, the common currency is trading higher than it has been since mid-January.
Oil prices are rising
Oil prices are slightly on the rise at the end of the week. The price for a barrel (159 liters) of North Sea Brent rose by 0.4 percent to $83.25.
The price of gold remains close to its record high of $2,164, which was set yesterday. A troy ounce of the yellow precious metal currently costs $2,160.
At the end of the week, the focus on the German stock market is on HelloFresh shares. After the MDAX group cashed in on its medium-term targets yesterday, many investors are pulling the ripcord. The share price temporarily collapsed by more than 40 percent. This marks the largest price loss in the company’s stock market history.
Analyst Emily Johnson from the British bank Barclays sees the cut targets for 2024 as a further disappointment after they had already rowed back for 2023 in November. According to Simon Baker of the major French bank Société Générale, the credibility of the group’s forecasts has been “seriously damaged.” After all, management emphasized not long ago that the problems were only temporary and would not have a major impact on 2024. Baker doubts that Hellofresh will be able to regain the trust of its investors in the near future.
The continued warning strikes by ground staff are also causing numerous flight cancellations at Lufthansa today. Once again, only 10 to 20 percent of the originally planned flights will take place, said a company spokesman. This means that around 1,000 flights will be canceled again, especially at the Munich and Frankfurt hubs.
Apple wants to make the switch from an iPhone to an Android smartphone more user-friendly in the EU next year. The group announced this as part of the implementation of the requirements of the DMA (Digital Markets Act). A corresponding solution should be available in autumn 2025. There is currently a Google app for switching from iPhone to Android, but some types of data are not transferred.
At the start of the morning shift, IG Metall called on employees of five companies in the Ford supplier park in Saarlouis to go on an indefinite strike. “Within a few hours, this means that production at the Ford plant itself comes to a standstill, as no car can be completed without the engine/transmission, axles, body parts, cable network systems and exhaust system,” the union said.
Tesla challenger Rivian is postponing the construction of a factory in the USA worth around five billion dollars until further notice. The move will initially save Rivian $2.25 billion, said company boss RJ Scaringe. The new factory in the US state of Georgia was originally intended to build the cheaper future electric SUV R2. Now the existing factory in Illinois will produce it instead.
High demand for semiconductors as a result of the AI boom has brought US chipmaker Broadcom earnings above expectations. In the first quarter, the company posted adjusted profit of $5.25 billion on revenue of $11.96 billion. The tech company benefited from high demand for its network chips.
After a jump in growth last year, the Italian fashion house wants to achieve above-average growth in 2024. “As in 2023, we are sticking to our ambitious goal of solid growth above the market,” said CEO Andrea Guerra. Sales grew by 17 percent to 4.7 billion euros in 2023 thanks to the high demand for Prada luxury fashion. The adjusted operating result jumped by a fifth to 1.06 billion euros.