market report
The weak specifications from the USA could push the DAX below the 19,000 point mark at the start of trading. Investors are now pinning their hopes on further interest rate cuts.
The broker IG estimates the DAX 0.8 percent lower to 18,956 points before the XETRA launch. Yesterday, concerns about the weakening German economy and the situation in the Middle East weighed on the German leading index. It closed 0.1 percent lower at 19,104 points.
The next interest rate decision by the European Central Bank (ECB) is on October 17th. Investors are hoping for further easing of monetary policy. There are new statements from important central bankers on this topic. The head of the Oesterreichische Nationalbank (OeNB) and member of the ECB Council, Robert Holzmann, warns against further premature interest rate steps despite falling inflation: “Inflation is on the right track. But it has not been defeated,” Holzmann told the Süddeutsche Zeitung. “I thought the last interest rate cut was right, but that is no reason to assume that further interest rate cuts would automatically follow.”
Bundesbank President Joachim Nagel believes a further interest rate cut by the ECB is possible. “I’m certainly open to thinking about whether we could possibly take another interest rate step,” said Nagel in a Table.Briefings podcast broadcast this morning.
But there is another factor that is likely to influence investors’ considerations in the future: “Investors have so far been relatively relaxed about the most important political event of the year, the presidential election in the USA,” writes Stefan Rondorf, investment strategist at Allianz Global Investors. “The uncertainty among stock investors that was often noticeable in the weeks before the election has not yet broken through, but some temporary setbacks in October would not be unusual.”
The requirements from the USA are likely to put a damper on the mood: The evaporation of interest rate euphoria following the latest US labor market data and worries about the situation in the Middle East had taken a toll on Wall Street yesterday. All three major indices closed around one percent in the red. The US standard value index Dow Jones closed trading with a loss of 0.9 percent at 41,954 points. The broader S&P 500 lost 1.0 percent to 5,695 points, and the tech-heavy Nasdaq lost 1.2 percent to 17,923 points.
The Asian stock markets did not find a consistent direction this morning. While the mainland stock markets in China started with strong gains after the week-long holidays and reached highs, the euphoria in Japan failed to materialize. In Tokyo, the Nikkei index, which includes 225 stocks, lost 1.2 percent to 38,861 points, while the broader Topix was 1.5 percent lower at 2,697 points. Traders pointed to weaker Wall Street guidance and the stronger yen as negative factors.
The Shanghai stock exchange, on the other hand, gained 4.3 percent to 3,480.86 points. The index of major companies in Shanghai and Shenzhen rose 5.6 percent to 4,242 points, its highest level since July 2022.
In view of the weakening economy, the Chinese government is planning a package of measures to support the economy. The chairman of the country’s economic planning authority, Zheng Shanjie, today announced plans to strengthen fiscal policy and improve coordination of various policy areas. Plans include, among other things, the issuance of special bonds, greater support for small businesses and steps to stabilize the real estate market.
The People’s Republic also wants to promote foreign investment and direct long-term capital into the financial markets. This year, 200 billion yuan (around 25.74 billion euros) will be made available for expenditure and investment projects.
The world’s second largest economy is currently struggling with weak growth. With the announced package of measures, the government in Beijing is responding to the ongoing economic challenges, including weak domestic demand and problems in the real estate sector.
Samsung’s latest business figures fall short of market expectations. In its quarterly outlook for the months of July to September, the South Korean electronics giant assumes that the operating result of 9.1 trillion won (around seven 6.2 billion euros) has increased fourfold year-on-year. However, compared to the previous second quarter, profits fell by almost 13 percent.