market report
The DAX will be able to recover a little from yesterday’s slide in the morning. Investors are waiting for the next interest rate decision by the US Federal Reserve. Many business figures come from the German indices.
At 15,780 points, the leading German index should start trading in the middle of the week in the morning, according to German pre-market indications. This corresponds to an increase of 0.4 percent. Yesterday the DAX lost around 1.2 percent in the wake of a weak Wall Street. Before that, however, it had climbed to a new annual high of 16,012 points.
Concerns about the US banking system caused prices in New York to fall yesterday into the evening. The collapse of the regional First Republic and the takeover by the major bank JP Morgan caused uncertainty. The banking index in the US slipped by around five percent. The Dow Jones index lost 1.1 percent to 33,684 points. The Nasdaq technology exchange also fell 1.1 percent to 12,080 jobs. The broader S&P 500 fell 1.2 percent to 4,119 points. “If First Republic can have a crisis of confidence, it can happen to any bank in this country,” commented Longbow Asset Management’s Jake Dollarhide.
The US Federal Reserve could carry out its last interest rate hike tonight at 8 p.m. German time. After strong increases since March 2022, the markets are only expecting a further increase of 0.25 percentage points. The Fed interest rate would then be in a range of 5.0 to 5.25 percent.
On the foreign exchange market, the swings in the run-up to the central bank’s decision are limited. The euro continues to hold above the 1.10 level against the dollar it regained yesterday. One euro currently costs $1.1024. The prices on the oil market have hardly changed either: A barrel of North Sea Brent costs $75.20 in early trading. The troy ounce of gold is currently trading at 2016 dollars, also at the level of the previous day.
Before the Fed’s decision in the evening, investors have to process a series of quarterly figures and company outlooks. Deutsche Post published its balance sheet from the DAX in the morning. Because of the economic consequences of the Ukraine war and the sluggish world economy, the logistics giant had to accept declines in sales and profits in the first quarter. Revenues fell from January to March to 20.9 (previous year: 22.6) billion euros, the operating result (EBIT) shrank by 24.1 percent to 1.6 billion euros. The group confirmed its profit targets for 2023.
The growing demand for travel and higher ticket prices brought Lufthansa significantly fewer losses at the start of the year. In the first quarter, the seasonally typical operating minus (adjusted EBIT) was 273 million euros and thus almost half as high as in the same period of the previous year. The net loss decreased only because of a write-down by a fifth to 467 million euros. Lufthansa boss Carsten Spohr sees the group on course to significantly exceed the operating result of 1.5 billion euros from 2022 in the current year as planned.
Shares of DAX member Infineon could react to weak figures from industry competitor AMD from the previous evening. The downturn in the PC market has also hit AMD. In the last quarter, sales fell 9 percent year-on-year to $5.35 billion. The decline in business with chips for personal computers was particularly strong. The bottom line was a loss of $139 million after being in the black from $786 million in the same quarter last year.
In contrast, the world’s largest coffee chain Starbucks managed to increase profits sharply. In the three months to the end of March, the company earned $908 million, around 35 percent more than a year ago. Group-wide revenues grew 14 percent to $8.7 billion. Starbucks benefited from price increases and a recovery in its important China business.
The second largest US automaker Ford started the fiscal year with surprisingly strong growth. In the first quarter, sales increased 20 percent year-on-year to $41.5 billion. Net profit was $1.8 billion. Earnings and revenues significantly exceeded Wall Street analysts’ forecasts. A year ago, a billion-dollar write-down on the stake in the electric car manufacturer Rivian brought the balance sheet deep into the red.