market report
Status: 11/28/2022 09:28 am
Investors’ willingness to take risks in the German stock market has decreased noticeably. The biggest wave of protests in China for decades is also dampening the mood to buy in this country. The DAX falls below 14,400 points at times.
The stock markets switched to “risk off” mode at the beginning of the week. Investors are shedding risky assets like stocks and oil, while safe havens like gold are in demand. Above all, it is the latest developments in China that are dampening the willingness to take risks on the Frankfurt stock market as well.
In the Middle Kingdom, popular protests against the strict measures of the state’s zero-Covid policy are increasing. This is causing growing uncertainty among investors – and it is well known that the markets hate nothing more than uncertainty. The current Covid outbreaks are also fueling fears among investors of a prolonged economic dry spell in the world’s second largest economy.
Profit-taking in the DAX
The DAX is therefore expanding its price losses in the course of trading. The provisional daily low is 14,381 points, which corresponds to a minus of 1.1 percent. In view of the recent strong price rally in the DAX, however, it is not particularly surprising that some investors are using the developments in China to take some profits.
Only on Friday did the DAX mark its highest level in five months at 14,572 points, and the leading German index had gained almost 23 percent since its low at the end of September. Market observers spoke of an “overbought” situation in the DAX.
US recession leading indicator strikes
Meanwhile, investors are also worried about the US bond market. The interest rate differential between 10-year and 2-year US bonds, at minus 80 basis points, was recently more negative than it had been since the early 1980s. In such a case, experts speak of an inverse yield curve. This is considered a reliable early indicator of a US recession.
Wall Street should open lower
Wall Street is also likely to go downhill at the beginning of the week against the background of developments in China. The future on the US leading index Dow Jones Industrial Average is currently trading 0.5 percent lower. The future of the tech-heavy Nasdaq 100 index is down 0.8 percent.
Wave of protests in China causes oil prices to fall
Oil prices fell sharply at the beginning of the week, picking up on last week’s losses. At the start of the week, concerns about further developments in China put pressure on prices, market observers said. A barrel (159 litres) of North Sea Brent costs US$ 81.11 at lunchtime. That is 3.3 percent less than on Friday.
Euro moves towards 1.05 dollar mark
The euro continued to expand its gains against the dollar during the course of trading. At lunchtime, 1.0476 dollars are paid for one euro, which corresponds to an increase of 1.1 percent. The fact that the euro is able to gain so significantly despite investors’ growing risk aversion is a clear sign of strength.
Market observers attribute this to the interest rate gap between Europe and the USA, which is gradually closing again. Investors on the futures markets are assuming that the Fed will be less aggressive than the ECB in the coming months.
Fresenius shares are enthroned at the top of the DAX
The Fresenius share ranks at the top of the DAX at lunchtime and can benefit from a buy recommendation from UBS. Analyst Graham Doyle emphasized that the medical group’s annual earnings growth is associated with fewer risks than the equivalent growth of other sector companies. Doyle therefore complained about the 70 percent discount at which the stock is traded. The stock is cheap in every respect.
Brenntag share in sell-off
By far the biggest loser in the DAX is the Brenntag share, which fell by almost eight percent. The chemicals trader’s papers are suffering from management’s takeover talks with US rival Univar Solutions. Analysts see light and shadow. Such a deal could release synergies, but the question of the purchase price is still open.
A merger could create a company with sales in excess of $30 billion. Univar shares were recently traded eleven percent higher on the Tradegate trading platform.
Possible delivery delays at Airbus
With a price drop of more than three percent, the Airbus share is the second-biggest loser in the DAX. According to insiders, Airbus is currently preparing customers for delays in the planned deliveries of some medium-haul aircraft. The background is uncertainties about the delivery of engines and other parts for the machines, and there is also a possible staff shortage. Airbus did not comment on the information.
VW stops production at a Chinese plant
Due to the corona-related restrictions in China, Volkswagen has stopped the assembly lines in one plant and is producing less elsewhere. “Production at the Chengdu plant has been temporarily stopped in connection with the current corona wave,” a spokesman said today when asked by the Reuters news agency. Two production lines at the Changchun plant are also affected.
BMW expects stable business in 2023
BMW CEO Oliver Zipse expects stable business in the coming year. There are different challenges and opportunities in the different world markets. The lockdowns in China, the largest car market, worried him, said Zipse. There should be enough gas in Germany this winter, but the car industry and its suppliers need a secure energy supply at competitive prices.
Adler Group share jumps up
Adler Group shares are on the up. The badly hit real estate group has reached an agreement with a core group of creditors to adjust the terms of the bonds issued by Adler. Most recently, the price increase was over 50 percent. For the first time since the end of August, the price approached the 3 euro mark again.
Barclays boss undergoes cancer treatment
The boss of the British bank Barclays, CS Venkatakrishnan, has to be treated for cancer. Venkatakrishnan will soon be working from home, the money house said. The treatment should last 12 to 16 weeks. “The company will operate normally during this time and I will remain actively involved in its management,” the bank chief said. The institute confirmed that no interim CEO had been appointed.