market report
The DAX rose again on the last trading day of the week, and further records should come as no surprise despite weak economic figures. But the chance of a strong correction also increases.
The DAX starts trading with an increase of around 0.1 percent to 18,487 points. Yesterday, the leading German index once again reached a record high thanks to ongoing fantasies of interest rate cuts. At its peak, it rose by 0.7 percent to up to 18,511 points – a record. The German leading index had previously marked highs on Tuesday, Monday, Friday and Thursday. At the close of trading yesterday it was half a percent higher at 18,477 points.
While there is no trading in Germany on Good Friday and Easter Monday due to public holidays, trading will take place again on Wall Street on Monday.
Setbacks are used to get started, and so a correction is still a long time coming, write Helaba’s market observers in their daily commentary. The signals would indicate an overbought market, they warn. “It should also be noted that important US data is due to be published on Good Friday and Easter Monday, to which it is not possible to react due to the holiday. In this respect, risk-conscious investors could be inclined to take profits,” is the conclusion of the experts.
Jochen Stanzl, market observer at CMC Markets, emphasizes that the German stock index is in overstretched territory in terms of charts. “A lightning correction can strike the market at any time, which could quickly cost the index 300, 400 or more points in a row. Such a cleansing storm would not be unusual. Corrections in a bull market produce the strongest price drops,” says the market strategist.
So far there has been no support from the economy: German retailers surprisingly took in less money in February, with sales falling by 1.8 percent compared to the previous month, the Federal Statistical Office announced. Adjusted for inflation (in real terms), there was an even larger decline of 1.9 percent.
This is unexpected: Economists surveyed by the Reuters news agency had expected growth of 0.3 percent. Measured as of February 2023, there was a real minus of 2.7 percent, which was more than three times as large as predicted. “This is a cold shower for any consumer hopes,” commented the chief economist at Hauck Aufhäuser Lamp Privatbank AG, Alexander Krüger, on the development.
Meanwhile, US Federal Reserve Director Christopher Waller sees no reason to rush to turn interest rates. But he doesn’t want to rule out a rate cut this year, Waller said at a public appearance. The latest data “tells me that it is prudent to keep interest rates on their current restrictive path, perhaps for longer than previously thought, to keep inflation on a sustainable path toward 2 percent,” Waller said.
It could take a few months for inflation data to ease, but until then a strong economy gives the US Federal Reserve the space to take stock of economic performance, the central banker explains.
“The market’s estimated probability of a first interest rate cut in the USA in June has fallen again to 60 percent, after it was already at 70 percent last week,” notes Stanzl.
The upward trend fueled by hopes of interest rate cuts also continued on the US stock exchanges. The Dow Jones index of standard stocks closed 1.2 percent higher at 39,760 points. The technology-heavy Nasdaq advanced 0.5 percent to 16,399 points. The broad S&P 500 gained 0.9 percent to 5,248 points. The day before, the three leading indices had reduced their initial gains and closed slightly in the red.
Investors are focusing on Friday’s data on personal consumption expenditure in the USA (PCE index), which is the US Federal Reserve’s preferred measure of inflation. The market hopes that this will provide further information about the prospects for interest rate cuts.
Speculation about an intervention in the Japanese foreign exchange market has made investors on the Tokyo Stock Exchange cautious. The leading index Nikkei lost 1.5 percent to 40,168 points, the broader Topix index fell 1.7 percent. The Ministry of Finance and the central bank held an emergency meeting to discuss the weak yen. They indicated that they were ready to intervene in the foreign exchange market.
A weaker yen makes exports from the world’s fourth-largest economy cheaper but can drive up prices for energy and other Japanese imports, fueling inflation and driving up the cost of living.
On the other hand, the Chinese stock market went up. The Shanghai stock exchange advanced by one percent, the index of the most important companies in Shanghai and Shenzhen gained 0.9 percent. Investors are counting on further economic aid from the Chinese government.
Jungheinrich has defied the economic downturn and achieved records in sales, order intake and operating profit in 2023. “For the first time, Jungheinrich achieved more than five billion euros in order intake and sales as well as over 400 million euros in EBIT,” emphasized company boss Lars Brzoska today. Thanks to the acquisition in the USA, the company also recorded sales of more than one billion euros outside of Europe for the first time.
The agricultural trader Baywa had a net loss of 93.4 million euros in 2023. A year earlier, Baywa had made a profit of 239.5 million euros. The increased interest rates in particular had a negative impact on earnings. Baywa had already announced the loss of the dividend in mid-March. Earnings before interest and taxes (EBIT) fell from 504 to 304 million euros, missing the target of 320 to 370 million euros.
The Czech investor Daniel Kretinsky has increased his stake in the wholesale group Metro. His investment company EP Global Commerce now holds 49.99 percent of the shares, according to an updated representation of Metro’s shareholder structure on its website. From a share of 50 percent, Kretinsky would then hold a direct majority in Metro.
Amazon is investing another $2.75 billion in an AI start-up. The world’s largest online retailer’s total investment in the company Anthropic will increase to four billion dollars (around 3.7 billion euros), Amazon announced. Anthropic develops software with artificial intelligence such as the chatbot Claude. Amazon initially joined the company in September. At that time it was also agreed that Amazon’s subsidiary AWS would become the central provider of cloud infrastructure for Anthropic.