Market report: Is the DAX opening the door to a record high?

market report

As of: May 7, 2024 7:39 a.m

The prospect of interest rate cuts in the USA continues to support the stock markets. The DAX is likely to continue its recovery. Can it open the door to all-time highs again?

Thanks to good guidance from overseas stock exchanges, the DAX is likely to continue its recovery path today. The broker IG currently estimates the German leading index 0.3 percent higher at 18,227 points. It would thus build on its price gains from the start of the week: yesterday the DAX gained 1.0 percent to 18,175 points.

The DAX now faces a fundamental directional decision: If it manages to overcome the recent interim highs of 18,226 and 18,236 points, this would give the ongoing upward movement on the German stock market additional momentum. At 18,567, the record high from the beginning of April is tempting – it is only two percent away.

Unexpectedly weak US labor market data had recently raised hopes of imminent interest rate cuts. Investors are betting that the US Federal Reserve will begin cutting interest rates in the second half of 2024. They hope for a “soft landing” for the US economy, in which growth and inflation cool down at the same time.

Fed Chairman Jerome Powell reiterated that the next rate hike would be lower. “Powell said he is confident that policy is hawkish and that the Fed will wait to cut rates until inflation stagnates, meaning the hurdle to raise rates is high,” said David Mericle of Goldman Sachs.

The renewed bets on a turnaround in interest rates in the USA this year also fueled prices on Wall Street at the beginning of the week. The Dow Jones index of standard stocks closed yesterday 0.5 percent higher at 38,852 points. The broader S&P 500 rose one percent to 5,180 points, and the Nasdaq tech exchange index gained 1.2 percent to 16,349 points.

In Japan, too, investors buy stocks in the morning. In Tokyo, the 225-value Nikkei index was 1.5 percent higher at 38,796 points in late trading. The Shanghai stock market is trending sideways.

The euro has hardly moved in Asian foreign exchange trading; the European common currency is currently at $1.0766. Gold costs $2,322 per troy ounce this morning, 0.2 percent less. At the beginning of the week, the yellow precious metal had benefited from the revived expectations of interest rate cuts and recorded strong price gains.

The reporting season is still in full swing in the DAX, with several companies opening their books today – including Zalando. The business of Europe’s largest online fashion retailer is beginning to stabilize. The gross merchandise volume (GMV) traded via the platform increased by 1.3 percent to 3.3 billion euros in the first quarter.

The medical technology group Siemens Healthineers improved its results in the second quarter. Adjusted earnings before interest and taxes (EBIT) rose by eight percent to 822 million euros. After taxes, the DAX group earned 431 million euros after 108 million euros in the same period last year.

The dialysis specialist Fresenius Medical Care benefited from higher sales prices and further savings at the start of the year. Adjusted operating profit increased by 23 percent to 416 million euros at constant exchange rates in the first quarter. The bottom line, however, was that group profits fell by 18 percent to 71 million euros.

The logistics group DHL Group started the year with a setback in earnings. As expected, there was no significant recovery in the global economy in the first quarter, the company said. Earnings before interest and taxes (EBIT) fell by almost a fifth to just over 1.3 billion euros. The bottom line is that profits fell similarly to 743 million euros.

Boeing employees falsified test reports on the long-haul 787 “Dreamliner” jet and brought the aircraft manufacturer a further investigation by the US Federal Aviation Administration (FAA). Boeing said that some of the checks on the connection between the fuselage and the wings were omitted but were nevertheless recorded as having been carried out.

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