market report
After the setback at the start of April, the DAX recorded slight gains again in the middle of the week. The reduced inflation in the euro zone is fueling hopes that the ECB will soon cut interest rates.
After the DAX lost more than 200 points following the long Easter weekend, the leading German index is today defending itself against an impending price correction. In the middle of the week it increased moderately with overall thin trading volumes – also thanks to lower inflation in the euro area.
The DAX started 0.22 percent higher and then expanded the slight gains slightly. At lunchtime the stock market barometer rose by 0.26 percent to 18,328 points. This means that it is well below the record high of 18,567 points reached yesterday morning, but its daily low from the first trading day of the month remained as support.
Returning concerns that interest rates could remain high for longer than previously hoped caused a setback yesterday. The trigger was economic data at Easter time, which pointed to a strong US economy. Market participants today spoke of a recovery on the stock markets, to which new inflation data contributed. Inflation in the euro zone weakened somewhat more than expected in March and is now at 2.4 percent.
“The ECB is getting closer to its inflation target,” said economist Thomas Gitzel from VP Bank. “The two percent inflation mark is just a blink of an eye away.” This increases the hope of the first interest rate cuts this year. However, according to Austria’s central bank chief Robert Holzmann, the ECB will probably only have the broad data base required to decide on an initial interest rate cut in June. But he has no fundamental objections to easing monetary policy, said Holzmann in an interview with the Reuters news agency. However, it is still too early in April.
Today’s recovery on the stock market will have to prove itself over time. “It will remain exciting today to see whether the US stock markets will also be on a stabilization course,” said market expert Andreas Lipkow. The focus is likely to be on the US labor market data in the afternoon. The March statistics on employment in private industry will be published. It is considered an important indicator for the official labor market report, which represents the economic peak of the week on Friday.
Market participants are also eagerly awaiting Fed Chairman Jerome Powell’s speech on the economic outlook. Investors hope that the appearance at Stanford University at 6 p.m. (CEST) will provide further information about the monetary policy course towards a turnaround in interest rates. According to current indications, the Dow Jones leading index is falling slightly at the start of trading.
But even if there is a correction – i.e. a setback within an upward trend – on the stock markets, analysts do not consider it a broken leg. The bank HSBC points out that the first quarter of 2024 was a strong one for the DAX with an increase of a good ten percent. In addition, April is now “historically the second strongest month”. The seasonally good April balance results primarily from years in which the DAX showed a loss in the previous three months. Against this background, “the hot index could possibly take a short break in the current month”.
Meanwhile, attention is also focused on the consequences of an earthquake in Taiwan. The strongest earthquake in 25 years on the east coast of the island state is bringing the issue of supply chains back into focus. “Taiwan is the world leader in chip production,” said Landesbank Baden-Württemberg. “The most important Taiwanese semiconductor manufacturer TSMC temporarily stopped production due to the earthquake.”
Precious metal prices have continued to soar with the prospect of falling interest rates. During the night, the price of one troy ounce of gold (about 31.1 grams) rose to a record high of $2,288 in London. Even calculated in euros, gold was more expensive than ever before at 2,124 euros. This means that the price in US dollars has reached a record high for the fourth trading day in a row. Market observers spoke of generally strong demand for precious metals, which also benefited the price of silver.
“The price of silver is rising to a two-year high on the heels of gold,” commented raw materials expert Carsten Fritsch from Commerzbank. At times an ounce of silver was traded for $26.55. This is the highest price since March 2022. With the recent price surge, gold has become more expensive by ten percent and silver by around 13 percent since the beginning of the year. Speculation on key interest rate cuts continues to be an important price driver for precious metals.
The euro exchange rate has moved little today. At midday, the common currency was trading at 1.07702 US dollars, around the same rate as the previous evening. Investors on the foreign exchange market are waiting for data on price developments from the euro zone.
Brent oil prices remained just below their highest level in five months today. A barrel (159 liters) of the North Sea variety for delivery in June cost $88.99 that morning. That was seven cents more than the day before. Yesterday evening the Brent price reached its highest price since the end of October at $89.32. Geopolitical risks in the Middle East recently boosted oil prices. In addition, the recent development of oil reserves in the USA supported prices.
The shares of GFT Technologies, which started the year weakly, benefited from a positively received press report. The shares of the IT service provider and software developer temporarily gained 4.7 percent in the morning, putting them at the top of the SDAX. A dealer rated an article in the “Frankfurter Allgemeine Zeitung” (FAZ) as slightly positive. Accordingly, the company is testing platforms for processing crypto money flows. A corresponding solution has been developed over several years and is scheduled to go into regular operation in the second half of the year.
Nordex has received another major order from wind and solar park developer UKA. UKA has ordered 39 turbines with a total generation capacity of 253 megawatts (MW), Nordex announced. The systems are scheduled to be built in Schleswig-Holstein, Lower Saxony, North Rhine-Westphalia, Hesse, Saxony-Anhalt and Brandenburg in 2025. In total, UKA has ordered wind turbines with an output of 450 MW from Nordex in the past three months.
The car manufacturer BMW started the year with an increase in sales on the US market. The Bavarians delivered 84,475 cars from the BMW house brand in the first quarter, which was 2.4 percent more than a year earlier, as the company announced. The fully electric cars (BEV – battery electric vehicles) provided momentum, increasing by almost two thirds to 10,713 cars. The increase in electric cars, which are primarily available as conventional passenger cars, helped offset a somewhat weaker performance in the more expensive SUVs, which make up the larger share of BMW’s sales in the United States.
The world’s second largest reinsurer Swiss Re is getting a new boss. The Swiss company announced that former Allianz manager Andreas Berger (57) will replace the previous CEO Christian Mumenthaler (54) on July 1st. Mumenthaler took over the management of Swiss Re in mid-2016. He said he was pleased to be able to hand over the helm, according to the statement. His successor, Berger, has been at Swiss Re since 2019, where he manages direct business with industrial companies.
The smartphone bank N26 is expanding its product range: The Berlin startup will in future offer customers in Germany trading in stocks and ETFs (“Exchange Traded Funds”), as the fintech announced today. This means that the neo-bank is not only competing against established financial institutions, but is also intensifying competition with the Berlin start-up Trade Republic.
At the US chip manufacturer Intel, the loss in the contract manufacturing division for semiconductors is increasing. In a statement to the US Securities and Exchange Commission, it said the Foundry manufacturing unit made an operating loss of $7 billion in 2023. The year before it was 5.2 billion. CEO Pat Gelsinger said during a presentation to investors that 2024 will be the year with the largest operating losses for the company’s chip business. It is expected to reach breakeven on an operational basis by around 2027.
The car manufacturer Volkswagen significantly increased sales in the USA in the first quarter. The company announced that the number of vehicles sold increased by 21 percent to a good 82,000 vehicles. There was an opposite development at the Audi subsidiary: sales fell by 16 percent to a good 44,000 cars.
Amazon is scaling back plans for its supermarket technology that would allow shoppers to simply grab items from shelves and leave the store. The networked shopping cart with cameras will instead be used in the in-house “Amazon Fresh” supermarkets in the USA in the future, said the responsible top manager Tony Hoggett to the website “The Information”. It has been found that this is more popular when shopping in larger retail spaces. Among other things, customers wanted to have a better overview of how expensive the purchase would be for them.