market report
Weak economic forecasts from China weigh on the DAX and on companies with strong China business. The debt issue in the USA, which has not yet been finally clarified, is also causing sales.
After the DAX had started the trading day with a whopping minus of one percent, it was able to recover somewhat in the course of trading. At the moment it is 0.53 percent lower at 15,826 points. The leading index closed yesterday at a discount of 0.27 percent to 15,909 points. This indicates a loss of 0.4 percent for the DAX in May. The German stock exchange barometer is moving further and further away from the 16,000 point mark.
The reasons for the mixed mood among investors are weak economic data from China and the debt dispute in the USA, which has not yet been fully resolved. “For investors, it’s time to hold your breath, because towards evening it will become clear whether the USA will raise its debt ceiling or whether there will be a temporary default,” said Jürgen Molnar, strategist at broker RoboMarkets. The Republican-led Rules Committee of the House of Representatives cleared the way for a full Chamber of Congress vote on the bill.
Meanwhile, there was positive economic data from Germany. The number of unemployed in Germany fell to 2.544 million in May. That was 42,000 fewer than in April, but 284,000 more than a year ago, as the Federal Employment Agency announced today. The rate fell by 0.2 points to 5.5 percent. “Despite the weak economy, the job market as a whole is stable,” said Daniel Terzenbach, head of the Federal Employment Agency.
Positive news also came from retail. The delivery bottlenecks there have recently eased further – but the business situation among companies remains clouded due to persistently high inflation. As reported by the ifo Institute, 41.3 percent of the retailers surveyed reported shortages in May, after 45.7 percent in April.
The ECB, on the other hand, warns of increased risks to the stability of the financial system in the euro area due to the recent banking turmoil, persistent inflation and tighter financing conditions. The monetary authorities announced that the prospects for financial stability in the 20-nation community remained fragile. “Price stability is crucial for lasting financial stability,” said ECB Vice President Luis de Guindos on the presentation of the central bank’s six-monthly Financial Stability Report. “But as we tighten monetary policy to bring down high inflation, it may expose vulnerabilities in the financial sector.”
Weak economic targets from China are particularly distressing for investors today. Chinese industry contracted faster than expected due to weak demand in May. Leading indicators turned out worse than expected in May. The official Purchasing Managers’ Index (PMI) for manufacturing fell for the second month in a row. While the service industry index remained in expansionary territory, it also fell. Both mood barometers were below expectations.
This brought the Asian stock markets another month of losses in May. The weak economic data fuel doubts about the recovery of the world’s second largest economy after the corona pandemic. The Japanese Nikkei index, which comprises 225 values, closed 1.4 percent lower at 30,888 points. The broader Topix index fell 1.3 percent. The Chinese CSI 300 index, which includes the 300 most important stocks on the Shenzhen and Shanghai stock exchanges, fell by 1.1 percent. Hong Kong SAR’s Hang Seng Index fell 2.72 percent shortly before the close.
Concerns over weakening demand from key oil importer China following weak economic data outweighed positive progress on US debt ceiling legislation. Brent crude futures for August delivery fell 1.86 percent to $72.4 a barrel, while the price of a barrel of America’s West Texas Intermediate (WTI) crude slipped 1.93 percent to $68.12 .
“With China’s industrial production and fixed investment growing at a slower-than-expected pace over the past month, markets are concerned that China’s demand for commodities is slowing faster than expected,” said Vivek Dhar, director of commodity research at the Commonwealth Bank of Australia.
The euro is trading below the $1.07 mark. The common currency traded at $1.06669 after trading at around $1.0730 the night before. The price of a troy ounce of gold fell 0.06 percent to 1976 dollars.
Munich Re papers gained 0.81 percent in a weaker market environment. Hannover Re, on the other hand, had to give back its profits in the course of trading. In the morning, the General Association of the German Insurance Industry (GDV) published quite positive data on the storm damage of the past year.
The sobering economic forecasts from China pushed the shares of companies with strong businesses in the People’s Republic. The European indices for the automotive sector and industry lost just under one and more than half a percent respectively. German corporations such as Continental, Mercedes Benz, Rational and Knorr Bremse lost between 0.9 and 2.8 percent. China is Germany’s most important trading partner.
The energy giant E.ON is lowering its prices for electricity and gas in view of the sharp fall in stock market prices. The group will reduce the work prices for several million customers as of September 1st, by an average of 18 percent in the basic supply of electricity and 28 percent in the basic supply of gas, the supplier announced today.
The energy group Uniper is once again in the spotlight. The titles of the largely nationalized gas importer were at times up more than 13 percent. Analysts and traders referred, among other things, to the increased volatility of the share due to the low free float and the falling gas prices, which allowed Uniper to benefit from its futures transactions.
The automobile manufacturer Volkswagen wants to largely stay out of price wars in China. “We will not participate in the discount battle at any price,” said China boss Ralf Brandstätter in a published internal interview. In its most important market, VW is under increasing pressure from up-and-coming Chinese manufacturers, who are more successful with electric cars than their Western competitors. The group’s sales have fallen in China – from around 4.2 million units before the Covid pandemic to almost 3.2 million vehicles last year.
The real estate group Deutsche Wohnen and its majority owner Vonovia are under pressure from investors because of a loan. The voting rights advisor ISS, together with the hedge fund Elliott, is pushing for a special review of a loan of up to two billion euros that Deutsche Wohnen had granted its major shareholder. It is to be examined whether the takeover by Vonovia was a reason for the granting of the loan. Vonovia took control of Deutsche Wohnen in 2021. However, it is not to be expected that the shareholders of Deutsche Wohnen will agree to the special audit, as Vonovia holds almost 90 percent of the shares. However, a vote is required if Elliott wants to legally enforce a special audit.
At today’s Annual General Meeting, Commerzbank shareholders set the course for a change at the top of the Supervisory Board: The former Bundesbank President Jens Weidmann is to become the new Chairman of the Supervisory Board, as the money house had already announced in November. Before that, however, the shareholders of the partially nationalized institute must elect Weidmann to the supervisory board. He would be the bank’s fourth chairman of the board within three years. Incumbent Helmut Gottschalk has only been in office since April 2021 and has decided not to run again for reasons of age.
The New Zealand airline Air New Zealand wants to weigh not only the luggage, but also the passengers before international flights in the coming weeks. The reason is that the pilots have to know the weight and balance of the loaded aircraft before each take-off, as the company announced. “It’s about safety. Every time we fly, we want to know exactly what the weight of the plane is,” airline boss Greg Foran told a radio station. The weight of 10,000 passengers is determined in total – but participation is voluntary. The data would be collected anonymously. Air New Zealand, meanwhile, was named the best airline in the world at this year’s Airline Excellence Awards today, replacing Qatar Airways.
On his first trip to the People’s Republic in three years, Tesla boss Elon Musk was celebrated by the Chinese like a star. “He’s an idol,” cheered one user on social media. “If only there was someone like Elon Musk in China.” Others even want the eccentric billionaire as US President. Musk is on a working visit to the People’s Republic, where he is to meet, among other things, the Chinese Minister of Foreign Affairs and Trade and the head of the battery manufacturer CATL.
Austria’s largest construction group defied the weaker construction sector at the start of the year and exceeded the 24 billion euro mark in order backlog for the first time. From January to March, Strabag’s order backlog increased by three percent to 24.5 billion euros. That corresponds to 1.4 times the annual output. Construction work climbed by ten percent to 3.4 billion euros. In view of the rise in mortgage interest rates, a shift from private to public contracts has increasingly made itself felt, the group explained.