US labor market too strong: DAX ends eight-week winning streak


market report

Status: 02.12.2022 18:09

Although the DAX closed slightly higher today, an eight-week winning streak has come to an end. The strong US labor market slowed investors and sparked new interest rate concerns in the markets.

The DAX starts the weekend with a slight increase of 0.3 percent to 14,529.39 points. The leading index recorded a narrow minus of 0.1 percent for the past week – an eight-week winning streak has ended.

The topic of the day and at the same time the brake on the demand for shares was the US jobs report for the month of November. It was unexpectedly strong and fueled new interest rate concerns among investors. “The hopes of an imminent turnaround in interest rates in the USA have once again been dampened by the persistently strong labor market,” commented Konstantin Oldenburger, market analyst at CMC Markets.

US job market worries investors

Because in November, the private sector created more new jobs than forecast. The hourly wages of employees also increased significantly more than predicted. The surprisingly sharp increase in wages will give the Fed a headache, wrote Thomas Altmann of QC Partners. Today’s employment report is not good news – at least not for the stock markets, because a healthy economy gives the Fed less reason to rein in interest rate policy.

Experts are concerned that the strong wage trend in particular could put further pressure on price developments and thus fuel inflation. “The wage-price spiral could ensure that inflation remains at a high level for a long time to come. This means that an interest rate pause is pushed back further, while the wish for an initial interest rate cut in 2023 is likely to remain unfulfilled,” says Oldenburger.

German export motor sputters

Domestic economic data also provided negative impetus for DAX trading. German exports in October are up 0.6 percent on the previous month shrunk to 133.5 billion eurost. Economists had only expected the decline to be half as strong. Imports even fell by 3.7 percent, more than they have since January.

At least one important indicator of inflation has developed positively: Producer prices in the euro zone rose by 30.8 percent in October compared to the same month last year. In September, the increase was still 41.9 percent. Producer prices are thus signaling an abating of the high inflationary pressure.

Dow Jones plummets

In response to the labor market report, prices in the USA initially fell significantly. According to observers, the US Federal Reserve could feel compelled to raise interest rates further sharply in order to calm the labor market. In the meantime, however, the indices have moved away from their daily lows.

The Dow Jones fell 0.1 percent to 34,365 points. The market-wide S&P 500 fell by 0.3 percent to 4063 points. The technology values ​​of the Nasdaq 100 lose 0.7 percent to 11,958 points.

Labor market report weighs on the euro

The euro fell on Friday after the strong US jobs report. In the afternoon, the dollar received a boost with the release of robust US jobs data, while the euro suffered in turn. The strong labor market report gives the US Federal Reserve leeway to continue to take decisive action against high inflation by raising interest rates.

Only slight increase in the price of oil

Oil prices have risen only slightly today after a boost in the current week. In the afternoon, a barrel (159 liters) of North Sea Brent cost 87.17 US dollars, four cents more than the day before. The price of a barrel of American West Texas Intermediate (WTI) grade rose by 31 cents to $81.54. The situation on the market has thus calmed down after the strong price increase since the beginning of the week. The dollar, which strengthened after a robust US jobs report, weighed on oil prices only temporarily.

Since Monday, the price of Brent oil has risen by around six dollars a barrel. In the past few days, the oil market has benefited from a somewhat less strict corona policy in China, which experts also attribute to the wave of protests among the population.

German World Cup bankruptcy leaves Adidas cold

Even after the departure of the German national team, Adidas is sticking to its sales expectations for the World Cup in Qatar. “We are absolutely satisfied with the World Cup business,” said an Adidas spokesman in Doha today. The goal set by former CEO Kasper Rorsted remains the same: sales of 400 million euros with products related to the World Cup – from the official World Cup ball to fan jerseys. Sales are currently higher than those at the 2018 World Cup in Russia. In the first nine months, Adidas had increased sales in football by 30 percent.

BMW begins production of hydrogen cars

BMW begins building its first hydrogen cars. The small series is being produced in the research center’s pilot plant, the company said. The cars have a fuel cell, in which electricity is generated for the drive, and are scheduled to go into operation as demonstrator vehicles from spring. BMW development chief Frank Weber said that the fuel cell does not require any critical raw materials such as cobalt, lithium or nickel. With the car, BMW could make customers an offer if the hydrogen economy became a reality across the board. BMW is working with Toyota on the fuel cell.

VW buys AI systems for voice control

Volkswagen’s software division Cariad wants to expand its business with another purchase of voice control systems. A mid double-digit million amount is to flow into the takeover of the company Paragon Semvox, which specializes in artificial intelligence (AI).

Stabilus wants to significantly increase the dividend

The executive committee of the automotive and industrial supplier Stabilus wants to significantly increase the dividend for the past fiscal year 2022 (until the end of September). At the Annual General Meeting on February 15, the Board of Management and the Supervisory Board intend to propose a dividend of EUR 1.75 per share to the shareholders. A year earlier, the dividend was EUR 1.25.

Management dispute at Cewe Foundation continues

The grueling leadership dispute remains with the photo service provider Cewe. The Executive Board is now having the re-election of the Chairman of the Board of Trustees, Rolf Hollander, legally checked for compliance with the Articles of Association.

Patrizia takes over Danish Advantage Management

Real estate investment provider Patrizia is raising its portfolio forecast for this year after making an acquisition in Denmark. So far, the management had assumed that the assets would be under its own management in the amount of 57 to 58 billion euros, now it should be 57 to 60 billion euros.

Credit Suisse is receiving customer funds again

The crisis-plagued Credit Suisse has stopped withdrawing customer funds. The outflows have practically come to a standstill, said Chairman of the Board of Directors Axel Lehmann on Friday on “Bloomberg TV”. Customers had promised him inflows. “We’re already seeing some of that.” From early October to mid-November, uncertainty about the state of the Swiss institute had led to net outflows of CHF 84 billion, or six percent of the total portfolio.

Tesla delivers first electric heavy-duty truck

Elon Musk delivered the first Tesla heavy-duty truck to PepsiCo yesterday. The long-haul, battery-powered truck will reduce highway emissions and outperform diesel trucks in terms of performance and safety, Musk said.

Twitter bans Kanye West for ‘inciting violence’

Online service Twitter today suspended rapper Kanye West’s account after the musician posted a picture of a Star of David intertwined with a swastika. West’s account was suspended for “inciting violence” said Twitter boss Elon Musk.

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