market report
The shortened trading week in the DAX has it all: Two important central bank decisions are pending. The emergency takeover of First Republic Bank is also unsettling investors.
The emergency takeover of the ailing US regional bank First Republic has caused mixed reactions on overseas stock exchanges. The specifications for today’s trading day on the German stock market are therefore inconsistent. After yesterday’s holiday, the DAX should start the shortened trading week with a small premium. The broker IG assesses the 40 German standard values at the hour 0.1 percent higher at 15,937 points.
The DAX is thus still lying in wait just below the 16,000 point mark. Most recently, the leading German index had struggled to climb from one year high to the next. However, the stock market barometer repeatedly shied away from the round mark of 16,000 points and thus also from the record high of 16,290 points. “On the stock markets, a wait-and-see attitude prevails until further prospects become clear,” wrote Ulrich Kater, chief economist at Dekabank.
This week, both the US Federal Reserve and the European Central Bank will decide on their future monetary policy course. It is currently expected that both will raise key interest rates by 0.25 percentage points in order to finally get the high inflation under control. But the ECB could also tighten monetary policy more, which would probably cause unrest on the stock exchange.
The emergency takeover of First Republic Bank by US market leader JPMorgan also causes uncertainty among investors. The collapse of the regional bank represents the largest US banking collapse since the collapse of former credit giant Washington Mutual, which was also acquired by JPMorgan during the 2008 financial crisis. First Republic is already the third US bank to collapse this year after massive withdrawals of funds due to liquidity concerns.
Investors on Wall Street tended to take JPMorgan’s bailout yesterday as positive news for the financial sector stabilization and for big banks, but as a warning sign for regional banks. While shares in JPMorgan and other major banks rose, shares in smaller institutions fell. The Dow Jones index ended 0.1 percent weaker at 34,051 points. The tech-heavy Nasdaq also fell 0.1 percent to 12,212 jobs. The broad S&P 500 closed little changed at 4167 points.
The jitters surrounding the US banking system are weighing on financials in Japan today. “There is a sense of financial instability not only in the US, but also in Japan and the rest of the global stock market,” said Maki Sawada of Normura. The 225-stock Nikkei Index is up 0.2 percent shortly before the Tokyo close. The Shanghai stock exchange is up 1.1 percent.
In Asian forex trading, the dollar is showing some weakness. At the same time, the euro rose by 0.1 percent to $1.0984. In the previous week, the European common currency had risen to $ 1.1094, its highest level in over a year. In the late morning, the European statistical office will publish its first estimate of inflation in the euro zone in April. On average, analysts expect the inflation rate to rise slightly to 7.0 percent from 6.9 percent in March. A troy ounce of gold in the morning costs 1982 dollars.
On the DAX, the focus is on the Infineon share in the morning. The chip company will start expanding its plant in Dresden today (2 p.m.). The ground-breaking ceremony will be attended by EU Commission President Ursula von der Leyen and Chancellor Olaf Scholz (SPD). The so-called Smart Power Fab is scheduled to be completed in 2026. Infineon wants to invest five billion euros in the expansion of semiconductor production and create around 1,000 new jobs. The investment is intended to help make Europe less dependent on semiconductors from the USA and, above all, from Asia.
The computer group IBM wants to hire fewer people for some jobs because their activities can be taken over by software based on artificial intelligence (AI). He expects that in HR administration, for example, around a third of the jobs can be replaced by AI and automation in five years, IBM boss Arvind Krischna told the Bloomberg financial service.
Due to the sluggish business deals and the difficult economic environment, the major US bank Morgan Stanley is planning further job cuts in the second quarter. Around 3,000 employees were affected, said a person familiar with the matter from the Reuters news agency. It is the second round of job cuts in six months.
The Swiss-American computer accessories manufacturer Logitech continued to struggle with a decline in sales in the fourth quarter. Due to customers’ growing concerns about an economic downturn, the company was unable to continue the strong growth during the home office boom in the corona pandemic. Revenue fell to $960 million in the three months ended March, compared to $1.23 billion in the same period last year.
For the first time in the company’s history, a woman will take the helm at the Australian airline Qantas. Former CFO Vanessa Hudson will succeed CEO Alan Joyce in November, who is leaving the company after more than 14 years, the airline with the kangaroo said. Hudson has held various management positions at Qantas for 28 years.
The chip designer Arm, whose technology is found in practically all smartphones, has taken the first step on the stock market. The company, which belongs to the Japanese technology group Softbank, submitted a confidential draft of a stock exchange prospectus to the US regulator SEC. The volume and price of the ARM share placement will be determined at a later date, it said. Softbank bought the British company in 2016 for $32 billion.