Market report: Record series in the DAX continues

market report

As of: February 29, 2024 9:33 a.m

It has almost become a habit: the DAX is setting a new record high. The stock market barometer has thus improved its record for the sixth day in a row. How much higher can the DAX go now?

The DAX is currently on a roll: The German stock market barometer rose to 17,656.40 points in early trading and thus reached the next record high. It is the sixth record in a row – despite mixed requirements from Wall Street.

The upward trend in the German leading index continues unbroken. Confirmation of the upward trend also comes from the DAX price index, which has also set a new record high. The DAX price index – that is the DAX without dividends. With this variant, only exchange rate changes are taken into account, as is customary internationally. For example, the US leading index Dow Jones and the Japanese Nikkei are price indices.

When calculating the common performance DAX, Deutsche Börse, however, includes the companies’ dividend payments. Critics therefore also speak of the “Botox DAX” or “tuned” DAX.

How far up can the performance DAX go now? Jörg Scherer, Head of Technical Analysis at HSBC, refers to the DAX price index. This still has five percent price potential. “Transferred to the performance variant, this corresponds to a price target of 18,375 points,” explains Scherer.

A correction is becoming increasingly likely, warns IG analyst Christian Henke and points to the carelessness of many investors: “Any concerns will be thrown overboard.” Capital market strategist Jürgen Molnar from the broker RoboMarkets speaks of a “rally from nowhere” and points to the large discrepancy between stock prices and the real economy.

The fact is: With its ongoing record hunt, the DAX is pretty much alone globally. Wall Street has interrupted its soaring momentum for the time being; the last record high in the Dow was last Friday.

In the middle of the week, prices on the world’s leading stock exchange in New York even went downhill. The Dow Jones index of standard stocks closed 0.1 percent lower at 38,949 points. The technology-heavy Nasdaq fell 0.6 percent to 15,947 positions. The broad S&P 500 lost 0.2 percent to 5,069 points.

The reason for US investors’ reluctance is upcoming inflation data: The price index for personal consumption expenditures (PCE), the US Federal Reserve’s preferred inflation indicator, will be published today. Economists expect prices to have risen by 0.4 percent month-on-month in January.

Important price data is also coming up in Germany: the Federal Statistical Office will announce how consumer prices developed in February based on preliminary data in the afternoon. Economists expect inflation to weaken further.

In the hope of further economic aid, investors have stocked up on Chinese stocks. The Shanghai Stock Exchange rose by almost two percent to 3,013 points. Meanwhile, investors in Japan continued to cash in following the Nikkei’s recent record hunt. The leading index fell by 0.1 percent to 39,166 points. Here, the appreciation of the yen hit sentiment, making Japanese companies’ goods less competitive on the global market.

Little movement on the foreign exchange market: The euro is 0.1 percent higher at $1.0828 in early trading. The price of gold has also hardly changed. The troy ounce of gold is currently trading at just under 2,037, 0.1 percent higher.

Oil prices continue to fall in the morning. The price for a barrel (159 liters) of North Sea Brent is quoted at $81.75, 0.5 percent lower.

The focus in the DAX this morning is on MTU shares. The recall of numerous engines caused the Munich manufacturer to suffer its first annual loss in its 90-year history. The bottom line was a deficit of 97 million euros in 2023 after a profit of 333 million a year earlier. The reason is a problematic metal powder that MTU’s partner Pratt & Whitney from the USA used in the turbines of many Airbus jets. For the Munich-based company, the additional inspections cost around one billion euros.

Consumer goods giant Beiersdorf expects its growth to slow after a strong year. Adjusted for exchange rate effects and acquisitions, sales are expected to increase by a mid-single-digit percentage in 2024. For the current year, CEO Vincent Warnery is hoping for a turnaround in his luxury brands “La Prairie” and “Chantecaille”.

The planned merger between parts of the truck group Daimler Truck and the Toyota subsidiary Hino in Asia has been delayed. The final contract signing was actually planned for the end of March 2024, but the procedures surrounding competition approvals and the investigations in connection with Hino’s engine certification have not yet been completed, the companies said.

The German car manufacturer Volkswagen and the Chinese electric car manufacturer XPeng want to work together on the development of electric cars in the future. The companies have reached an agreement on the joint development of two battery-powered B-class vehicles.

Thyssenkrupp has spoken out against reports of cuts at the steel subsidiary. The group reacted in the evening to a report in the “Handelsblatt” that at least 5,000 of the 27,000 jobs at Thyssenkrupp Steel Europe could be lost. “We are surprised by the speculation expressed in the Handelsblatt,” the company said.

Low prices for zinc and high melting costs significantly impacted the results of the industrial recycler Befesa last year. The bottom line is that with a net profit of 58 million euros, only about half of the previous year’s surplus remained. The board therefore wants to reduce the dividend for 2023 from 1.25 euros in the previous year to 0.73 euros.

The inverter manufacturer SMA Solar increased sales and earnings significantly last year. The bottom line is that SMA posted a profit of 225.7 million euros after 55.8 million euros in the previous year. The sales forecast for 2024 in particular shows confidence, emphasized a dealer. The promised 1.95 to 2.22 billion euros are more than the market expectation.

The shares of the wind energy company Nordex are also in demand for numbers. In an initial reaction, analyst Constantin Hesse from Jefferies primarily praised the positive cash flow last year and a strong sales target for 2024. At 7 to 7.7 billion euros, the latter was well behind the consensus estimate of 6.44 billion euros.

After record sales in 2023, the forklift manufacturer Kion expects further growth for the current year. Overall, sales are expected to increase slightly and profits will increase significantly. In 2023, revenue increased by three percent to 11.4 billion euros, making it higher than ever before. Net profit roughly tripled to 314 million euros.

Patrizia is cautious after declines

The real estate investor Patrizia is looking cautiously towards 2024 after a significant drop in operating results last year. Patrizia is expecting an operating result (Ebitda) in the range of 30 to 60 million euros this year. According to preliminary figures, last year the key figure fell by 31.5 percent to 54.1 million euros.

Bad news for AMS-Osram: The German-Austrian sensor and lighting company has lost its most important customer for its new MicroLED technology. As is usual in the industry, AMS-Osram did not name the client, but according to insiders and media reports, the company had the US smartphone giant Apple in its sights when building the chip factory.

The world’s largest brewing company Anheuser-Busch achieved record sales in 2023. Anheuser-Busch had sales of $59.38 billion, an increase of 7.8 percent. Price increases also contributed to this. The company had to deal with a boycott campaign in the USA after an advertising campaign with the transgender influencer Dylan Mulvaney. This pushed the Bud Light brand out of its top spot as the best-selling US beer.

After repeated quality problems in Boeing production, the US aviation authority FAA wants to see rapid changes. The aircraft manufacturer has 90 days to submit an action plan to improve quality controls, FAA boss Mike Whitaker announced yesterday. Boeing must commit to “real and profound improvements” and examine every aspect of quality assurance, emphasized Whitaker.

Sluggish PC demand has caused HP to decline in sales for the seventh quarter in a row. The computer manufacturer announced in the evening that revenue fell surprisingly significantly by 4.4 percent to $13.19 billion in the past quarter. However, profits rose by about a third to $0.62 per share. HP stocks then slipped by more than six percent in after-hours US trading.

A disappointing outlook has pushed Salesforce’s announcement of a dividend and additional share buybacks into the background. Because many customers are curbing costs due to the weak economy and high interest rates, SAP’s rival forecast sales of $37.7 to $38 billion for the 2024/2025 financial year. Analysts had expected $38.62 billion.

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