market report
Status: 02/21/2022 07:47 a.m
At the start of the week, the stock markets are dominated by the escalation in Ukraine. Is it still possible to find a diplomatic agreement? Investors hope too.
Can a summit meeting between US President Joe Biden and Russian President Vladimir Putin defuse the Ukraine crisis? This question should determine what is happening on the stock exchange at the start of the week. The fact that both politicians have agreed to meet gives some hope. The DAX is expected above its closing level on Friday at 15,042 points.
The further agenda today is manageable. PMI data for Germany and the euro zone from February are expected in the morning. In the US, the stock exchange is closed for a holiday. US investors were no longer leaning out of the window on Friday and Wall Street ended trading slightly in the red.
Serious consequences for the economy to be expected
“The Ukraine conflict is hanging like a gray cloud over the stock markets,” wrote Ulrich Kater, chief economist at Dekabank. The recent price fluctuations on the financial markets are due to the economic risks of an escalation of the situation. Military action by Russia would result in economic sanctions. You have to say clearly “that sanctions will also hit our own economy hard,” said Federal Minister of Economics Robert Habeck (Greens) to the “Handelsblatt”. That is “also clear to our companies”.
According to the analyst Andreas Hürkamp from Commerzbank, the leading German index DAX should fall towards 14,000 points if Russia invades Ukraine. Currently, the round mark of 15,000 points still represents good support for the stock market barometer. However, Hürkamp qualified, in the past regionally limited wars have often only had a short-term impact on the stock markets.
Meanwhile, concerns among investors in Asia about an aggressive tightening of monetary policy by the US Federal Reserve cannot quash the prospect of a diplomatic solution to the Ukraine conflict. The Tokyo Nikkei Index lost 0.8 percent and most of the other Asian markets also gave way.
The stockbrokers look at the US core inflation data released this week: According to experts, the data is expected to show an annual increase of 5.1 percent – the highest rate of inflation since the early 1980s. “January inflation readings surprised sharply to the upside,” said Bruce Kasman, chief economist at JPMorgan. “We now expect the Fed to hike rates by 25 basis points at each of the next nine meetings.”
In the FX market, the euro is gaining in early business, trading at $1.1365. In addition to the US inflation data, the market expects the domestic ifo business climate index tomorrow.
According to expert estimates, winter storm “Zeynep” costs insurers in Germany around one billion euros. The storm that crossed the Federal Republic on Friday and Saturday was the most intense since Kryill in 2007, said the actuaries (actuaries) of the Cologne consulting firm Meyerthole Siems Kohlruss (MSK) at the weekend. In the course of the week, among other things, DAX member Munich Re will present business figures.
In view of the impending escalation in the Ukraine conflict, Lufthansa and the airlines belonging to the group are temporarily canceling the majority of their flights to Ukraine from today. The airlines will initially suspend their regular flights to Kiev and Odessa until the end of February, as the company announced on Saturday on request.