market report
Status: 11/15/2022 6:08 p.m
The DAX ended trading in the wake of Wall Street with moderate gains. The market thus remains at a high level and is benefiting from easing interest rate fears in the USA.
Buoyed by easing interest rate fears in the USA, the DAX rose moderately today. The leading German index ended trading at 14,378 points, a daily gain of 0.46 percent. After the index had changed sign several times over the course of the day, it finally turned positive in the afternoon after new price data from the USA. The daily high was 14,440 points, the daily low was 14,266 points.
Since the low for the year at the end of September, the DAX has recovered by around 20 percent or almost 2400 points. Despite this, profit-taking is still not on the cards, which would not be unusual after such a rise.
“After a price increase of more than 20 percent, a breather or even a consolidation is more the norm than the exception,” says portfolio manager Thomas Altmann from the investment advisor QC Partners.
Inflationary pressures in the US continue to ease
The concrete trigger for the buying in the afternoon was the better than expected US producer prices in October. These showed that inflationary pressures at the manufacturer level continued to moderate, as recently at the consumer level. Producer prices rose 8 percent month-on-month. Analysts had expected an average of 8.3 percent.
Producer prices are considered an indicator of future price pressure. Falling inflation is one of the central aspects for the US Federal Reserve, which means it may not be raising interest rates as much as recently. It is precisely this hope that is currently driving the stock markets, although fears of a recession are not yet off the table.
The Fed’s stability target of 2.0 percent is also still a long way off. The US monetary authorities are aiming for an inflation rate of 2.0 percent – comparable to the European Central Bank ECB.
“The fact that price pressure eased more than expected last month eases smoldering interest rate concerns on both sides of the Atlantic,” said Emden Research analyst Timo Emden.
Recently, statements by Fed Vice Chair Lael Brainard suggested that the central bank could only raise the key interest rate by half a percentage point in December. In a Bloomberg interview, she called the surprisingly sharp drop in inflation by half a percentage point “reassuring”.
Significant gains on Wall Street
Wall Street is going up significantly faster than in Germany. Expecting smaller rate hikes from the Federal Reserve, investors are boldly grabbing US stocks. The interest-sensitive technology exchange Nasdaq in particular is continuing its recent run and is currently up around 2.5 percent. Since the consumer price data from last Thursday, the plus has been more than ten percent.
“The data supports hopes that inflation is turning the corner,” said Robert Pavlik, portfolio manager at wealth manager Dakota Wealth. “It gives the market more confidence.”
Wholesale prices rise more slowly
The German wholesale prices for October also provided some basic support for the domestic stock market in the morning: They increased by 17.4 percent compared to the same month last year, according to the Federal Statistical Office. This is the smallest increase since February, when the Russian war against Ukraine began and many raw materials and intermediate products became more expensive.
“Is this now the trend reversal for inflation? I would still be careful there,” said LBBW economist Jens-Oliver Niklasch. In the case of energy and food in particular, the price pressure on consumers could increase. “We therefore only see the inflation maximum shortly after the turn of the year.”
ZEW index rises surprisingly significantly
The ZEW index also sent positive signals. The barometer of the Center for European Economic Research (ZEW) rose by 22.5 points compared to the previous month to minus 36.7 points. The assessment of the economic situation also improved surprisingly by 7.7 points to minus 64.5 points.
Nevertheless, the economic situation remains tense: “The slight improvement in sentiment does not yet mean a trend reversal, because the imponderables and the economic headwind due to the high inflation remain high for the time being,” comments Christoph Swonke, economist at DZ Bank.
The euro is picking up
The euro course picked up significantly on Tuesday after a cautious start. The common currency climbed as high as $1.0437 during the day, its highest level since early July. In the late afternoon, the euro is trading at $1.0386. The European Central Bank set the reference rate at 1.0404 (Monday: 1.0319) dollars.
On the one hand, traders referred to a broad weakness in the dollar as a driving force, from which the euro also benefited. Given lighter Signs of relaxation in relations between China and the USA the US currency was hardly in demand as a safe haven for economically uncertain times. After a meeting with China’s head of state and party leader Xi Jinping on the island of Bali, US President Joe Biden emphasized that he was not looking for a conflict with China.
On the other hand, the robust economic data from Germany are supporting the euro. “The improvements in the ZEW economic expectations are justified, as there have recently been a number of bright spots,” wrote Thomas Gitzel, chief economist at VP Bank. Above all, the prospect of a cap on energy prices gives hope that a sharp slump in the German economy will not occur.
Oil prices limit losses
Both the North Sea variety Brent and the American variety West Texas Intermediate (WTI) initially became cheaper on the oil market, before the losses were limited in the late afternoon. This leaves trade without a clear direction. Oil prices had already fallen at the start of the week. Quotations fell after oil cartel Opec lowered its demand forecasts for this year and next. The move was justified with “considerable uncertainty about the global economy, accompanied by fears of a global recession”.
The current price losses were also explained by weaker economic data from China, one of the most important oil importers. The tough measures taken by the leadership in Beijing in the fight against the corona virus slowed down the world’s second largest economy more than expected in October. Retail sales surprisingly fell and industrial production did not grow as strongly as it had recently.
Gold price at three-month high
The gold price was initially unable to sustain higher gains and ended up trading little changed at $1769 a troy ounce (31.1 grams). In the meantime, however, the price reached its highest level in three months. According to market observers, the prospect of less sharply rising US interest rates has increased demand for the precious metal. In the afternoon, the price of a troy ounce on the London Stock Exchange climbed to 1786 US dollars. The price of gold has not been this high since mid-August. The price of gold has been going up since the beginning of November. During that time, the precious metal has gained about nine percent.
Buffett enters the chip industry
Warren Buffett has invested several billion dollars in the stock market with his investment fund Berkshire Hathaway. This emerges from a report to the US Securities and Exchange Commission. While in return he reduced other investments, mainly in the financial sector, from July to September, he made a major commitment to the tech industry: Berkshire took advantage of the fall in the world’s largest chip manufacturer TSMC and acquired around 60 million American depositary receipts from the Taiwan-based group. Assuming the papers were bought at the average price, the investment would have cost around $5.1 billion.
Maersk boss sees container shipping at a turning point
According to the major Danish shipping company Maersk, container shipping is reaching its limits. A turning point has been reached in terms of both the size of the ships and the freight prices, said CEO Soren Skou. With 20,000, 22,000 and more standard containers (TEU) a dimension has been reached from which the question of profitability arises, especially since world trade is no longer growing so strongly. “The ships won’t get any bigger,” Skou predicted. Maersk is the world’s second largest container shipping company after MSC from Switzerland.
Encavis deserves more
The solar and wind farm operator Encavis continues to benefit from expanded generation capacities and high electricity prices. In the first nine months, sales increased by around 37 percent year-on-year to EUR 354.8 million. Earnings before interest and taxes adjusted for special effects rose by around 45 percent to EUR 166.9 million. The bottom line was an adjusted profit of 86.9 million euros after 57.8 million euros in the previous year.
Bad prospects for Nordex
Wind turbine manufacturer Nordex is becoming more pessimistic about the current year. The operating margin (Ebitda margin) is expected to be around minus four percent at the lower end of the forecast corridor. The reasons are the constant interruptions in the supply chains, consequential costs from project delays and the inflationary price environment. In the first nine months of 2022, sales fell by 2.1 percent to around 3.9 billion euros. Earnings before interest, taxes, depreciation and amortization (Ebitda) were clearly negative at minus 200 million euros. A year ago, an operating profit of 101 million euros was incurred. The operating margin was minus 5.2 percent.
Advertising slump weighs on ProSiebenSat.1
Shrinking advertising income is a heavy burden on the television company ProSiebenSat.1. As the company announced, sales in the third quarter fell by 13 percent to 921 million euros, the operating profit adjusted for special effects (Ebitda) fell by 27 percent to 118 million euros. CFO Ralf Peter Gierig said: “The market environment continued to deteriorate over the course of the year due to inflation, the energy price crisis and consumer restraint.”
Data protection: Google pays damages
Google is paying nearly $392 million in damages after US investigations into misleading privacy claims. Attorneys general from 40 states concluded that Google continued to collect location data from users after they opted out. The prosecutors general criticized the fact that Google had given users the option to refuse the storage of their location data. However, they were not informed that Google apps also automatically collect position data.
FedEx wants to temporarily lay off US employees
The freight division of the US parcel delivery company FedEx wants to temporarily release employees in some US markets. The reason is the current terms and conditions. The DHL rival wants to continue to monitor the economic development and bring the affected employees back if business improves. Some employees are to be offered permanent jobs in other areas where staff are needed. The company, like its domestic rival UPS, is also considered a barometer of the US economy, as it transports goods from a wide variety of industries.
Credit Suisse sells securitization business to Apollo
Credit Suisse sold him a large part of its loan securitization business (Securitized Products Group) and associated financing transactions to the US financial investor Apollo Global Management as part of its far-reaching corporate restructuring. After the bank had already announced the transaction at the end of October, it announced today that the definitive transaction agreement had been concluded. The transaction is expected to close by mid-2023. Credit Suisse expects Apollo to take on most of the employees.