Market observers expect that the DAX will start trading much lower at the end of the week. The guidance from Wall Street and Asian stock markets doesn’t look particularly inviting.
Because the situation has not changed for a few days: hopes for good corporate results in the beginning of the accounting season are opposed to concerns about interest rate increases in the USA. Yesterday, several members of the US Federal Reserve (Fed) spoke out in favor of raising the key interest rate in the near future, and it could happen as early as March. “We expect the Fed to hike rates in March. This will then be the first of four forecast rate hikes this year,” wrote market watchers Credit Suisse in their morning commentary.
Today the big banks Citigroup, JPMorgan and Wells Fargo open the US accounting season. There is a possibility of positive surprises: In the previous quarterly results, the financial institutions had made extensive provisions for possible defaults by their borrowers, said Fall Ainina, senior analyst at asset manager James Investment. “But now the situation has improved significantly.”
Wall Street is weakening
Before the accounting season, Wall Street fell back on interest rate concerns: the Dow Jones closed 0.5 percent lower at 36,113 points. The tech-heavy Nasdaq fell 2.5 percent to 14,806 points. The S&P 500 lost 1.4 percent to 4659 points.
Things also went backwards in Asia, and even sharply in Japan: the Nikkei index lost 1.3 percent to 28,124 points. The broader Topix index fell 2 percent to 1,965 points. The Shanghai stock exchange was down 0.5 percent. The index of the most important companies in Shanghai and Shenzhen lost 0.5 percent. “Everyone is really nervous right now. That’s because everything could come under pressure from aggressive Fed policy,” said Kyle Rodda, a market analyst at IG in Melbourne.
German imports to China are falling behind
China’s foreign trade again grew in double digits in December, but overall at a slower pace than in the previous month. As reported by customs, exports calculated in dollars rose by 20.9 percent compared to the same month last year, after growth in November was still 22 percent.
China’s imports increased by 19.5 percent in December. In the previous month, the increase was still 31.7 percent. Business in December was particularly bad for German exporters. Chinese imports from Germany fell by 14.1 percent compared to the same month last year. On the other hand, as in November, China’s exports to Germany again increased strongly by 29 percent.
Inflation out of control in Argentina
After easing in the first year of the Corona crisis, inflation in Argentina has picked up sharply again. The inflation rate in the South American country, which is in a severe economic crisis, rose by 14.8 percentage points to 50.9 percent in 2021 compared to the previous year, according to the statistics authority (INDEC). Argentina has one of the highest inflation rates in the world. Despite government freezes on many products and services, inflation in 2021 was the second-highest in 30 years.
SAP relies on the cloud
The software group SAP is confident about the new financial year given the strong growth in the cloud. In the current year, currency-adjusted cloud revenues are expected to increase by 23 to 26 percent to 11.55 to 11.85 billion euros, the DAX group announced. The forecast reflects a further acceleration, said CFO Luka Mucic. Cloud revenue increased 19 percent in constant currency to €9.59 billion in 2021, at the upper end of guidance.
In the past year, the currency-adjusted operating result increased by one percent to 8.41 billion euros. Total SAP revenue increased 2 percent year-on-year to €27.8 billion in 2021.
Wacker deserves more
Due to high prices and good demand, Wacker Chemie earned more than expected from operations in the past fiscal year. Based on preliminary figures, earnings before interest, taxes, depreciation and amortization (Ebitda) rose to around 1.5 billion euros, as the MDAX company announced. Management thus exceeded its own targets and analysts’ expectations. In 2020, the value was still 666.3 million euros. Wacker Chemie increased sales by almost a third to around 6.2 billion euros.