market report
Status: 06/16/2022 12:29 p.m
After the surprisingly significant increase in interest rates by the Swiss central bank, panic is spreading in the market. The DAX keeps slipping. Where can the leading German index find support now?
The DAX extended its early losses during the morning. It goes down to 13,084 points. This corresponds to a minus of 3.0 percent compared to the previous day’s closing price. The DAX has thus reached a new low since March. The most recent drastic actions by the central banks are causing unrest among investors.
SNB decision as a warning signal
The markets not only have to digest that the US Federal Reserve raised interest rates by 75 basis points yesterday – the most since 1994. Above all, it is the surprising rate hike by the Swiss National Bank (SNB) that is hitting Europe’s already fragile stock exchanges hard today. The SNB had raised the key interest rate by 0.5 percentage points and described this as a measure against inflationary pressure.
The markets are interpreting this as a warning signal: Apparently, more and more central banks are afraid of losing control over inflation expectations, after having hesitated for a long time to even identify the high inflation rates as a permanent problem.
Update economy from 06/16/2022
Dorothee Holz, HR, 16.6.2022 10:09 a.m
Are the central banks reacting too late?
So now the Fed, SNB and presumably soon the European Central Bank (ECB), on which the pressure is increasing after the SNB decision, are reacting. The SNB’s decision shows that pretty much all major central banks are pulling in the same direction, said Chris Scicluna of Daiwa Capital Markets.
But is the tightening of monetary policy too late to contain inflation? And what is the collateral damage? Will rising interest rates stall the economy and plunge the US and Europe into recession?
Yields soaring high, DAX in deep frenzy
It’s questions like these that are on the minds of investors and are currently giving them a wide berth about stocks. Especially since the surprising interest rate increase by the SNB also forced a new sell-off on the bond markets; in return, yields soared.
With today’s price slide and the marking of a new three-month low, the technical picture in the DAX is also becoming cloudier. The German stock market barometer had already sent a sell signal a few days earlier when it fell below the low of early May (13,381 points).
The technical analysts at HSBC Trinkaus warn that this negative course now even gives rise to fears of a reunion with the previous low for the year from the beginning of March at 12,439 points.
Witches’ Sabbath provides additional volatility
The upcoming expiry date is causing additional uncertainty among investors. On this day, investors close their long and short positions on the futures exchanges. In advance, they try to steer the prices on the spot markets, such as the DAX, in the direction they want. This is likely to increase the ups and downs in prices even further in the short term.
Oil prices on the decline
Investors’ declining risk aversion and the rising dollar are also having an impact on the oil market. At lunchtime, a barrel (159 liters) of North Sea Brent costs 118.06 US dollars. That is 1.8 percent less than the day before.
Euro and gold with losses
Meanwhile, the big US interest rate hike is giving the dollar a boost. In return, the euro loses 0.6 percent to $ 1.0401. An ounce of gold costs $1829.
Zalando share collapses
Papers from the online fashion retailer Zalando take over the red lantern in the DAX. They plummeted by almost twelve percent at lunchtime, falling to their lowest level since February 2019. A lowered forecast by British competitor Asos and a disappointing interim report by Boohoo are creating a bad mood in the industry.
EU car market continues to slump
The DAX also focuses on car stocks. In May, new car registrations in the European Union fell by eleven percent to 791,000 vehicles, as the manufacturers’ association ACEA announced today. That was the tenth minus month in a row. However, the minus was not quite as large as in the previous month (20.6 percent).
Südzucker shares remain in demand
In the MDAX, Südzucker shares increased their previous day’s gains by more than three percent at lunchtime. Warburg Research analyst Oliver Schwarz has dropped his sell recommendation for the stock. In doing so, he was reacting to the increased annual targets, mainly thanks to the excellent development at the biofuel subsidiary CropEnergies.
Nordex flies out of the indices
Nordex received the receipt for the delayed submission of quarterly figures. The shares of the manufacturer of wind turbines will be removed from the SDAX and TecDAX, as announced by Deutsche Börse as an index provider. In return, the specialty pharmaceutical company Medios is back in the index of smaller stocks. In the TecDAX, Nordex is replaced by SMA Solar Technology.
Metro separates from Belgium business
The wholesaler Metro pulls the ripcord in its loss-making business in Belgium after more than 50 years. The subsidiary Makro Cash & Carry Belgium will be sold to a financial vehicle backed by the restructuring experts of the German One Square Advisors, Metro announced. Metro hopes that the sale will improve its operating result (Ebitda) by 20 million euros a year.
Financial investors hold 84 percent of Aareal Bank
Aareal Bank in Wiesbaden is now 84 percent in the hands of financial investors. The consortium of Advent International, Centerbridge and the Canadian pension fund CPPIB (Canada Pension Plan Investment Board) secured 83.8 percent of the shares in the real estate financier after the last acceptance period.
Erste Group gets new boss
Austria’s largest bank Erste Group has found a successor for the outgoing CEO Bernhard Spalt. The supervisory board has looked after the current corporate customer board member of the Austrian subsidiary, Willi Cernko, with the management of the bank from July 1st, the money house announced on Wednesday evening. Spalt recently surprisingly announced that he did not want to extend his contract.
Roche receives emergency approval for nasal corona PCR test
The Swiss pharmaceutical company Roche has received emergency authorization from the US health authority FDA for the corona PCR test “Cobas SARS-CoV-2 Duo”. It is the first nasal PCR test that simultaneously detects Covid disease and viral load. The viral load helps in the assessment and monitoring of infected patients.
Youtube Shorts attracts 1.5 billion users
According to its own statements, YouTube has caught up with its competitor Tiktok when it comes to short videos. As the video service announced yesterday, more than 1.5 billion users per month now use the offer with videos with a maximum length of 60 seconds. “Shorts really caught on,” said product manager Neal Mohan.
EMA reviews Pfizer/BioNTech variant vaccine
The EU medicines agency EMA has initiated the rapid testing procedure for a corona vaccine from the manufacturers Pfizer and BioNTech that has been adapted to virus variants. The vaccine is intended to provide more targeted protection against the omicron variant of the virus. So far, no vaccine has been approved in the EU that also targets variants of the corona virus.
FDA advisors recommend corona vaccines for smaller children
An advisory panel to the US Food and Drug Administration (FDA) has advocated the use of coronavirus vaccines in children between the ages of six months and five years. Both the vaccine from the manufacturers BioNTech and Pfizer and the preparation from Moderna could be used for this, the committee ruled unanimously. The FDA usually follows the assessment of the consultants.