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Market report: fear of interest rates slows down the DAX

Market report: fear of interest rates slows down the DAX
Written by insideindyhomes


market report

Status: 08.06.2022 12:42 p.m

Stock markets are making no headway ahead of tomorrow’s European Central Bank interest rate meeting. The leading German index cannot use the good specifications from Wall Street and is slipping deeper into the minus zone.

The German stock exchange barometer was only able to briefly overcome yesterday’s closing price level in the morning. At noon, the DAX even slipped below the 14,500 point mark and is currently losing around half a percent.

Fear of rate hikes

Investors on the stock market continue to be burdened by concerns about upcoming interest rate hikes by the central banks. Market strategist Emmanuel Cau from the British Barclays Bank believes that without a significant drop in consumer prices, the pressure on the central banks will not end anytime soon.

“Until the implications of tighter policies become clearer, markets may remain jittery as the road to a soft landing is narrow.” The European Central Bank (ECB) will make an interest rate decision tomorrow.

Update economy from 08.06.2022

Anne-Catherine Beck, HR, 06/08/2022 09:55 am

Wall Street with limited backing

Both the US stock exchanges closed with gains yesterday evening and the Asian markets this morning. However, a further price surge is not to be expected here either. US futures are currently pointing to a market start with no further gains on Wall Street.

euros at 1.07 dollars

On the foreign exchange market, too, market participants want to devalue statements (ECB) on future monetary policy in the euro area. The euro continues to struggle against the dollar. The European single currency is meanwhile continuing to hover around the $1.07 mark and is currently trading at $1.0705.

Oil prices remain at a high level. A barrel of North Sea Brent costs more than $120. The oil market is currently also receiving support from the less tense corona situation in large Chinese cities. China’s rigorous corona policy, which countered the virus with strict curfews, had placed a heavy burden on the Chinese economy and world trade.

OECD lowers growth forecast

In addition to interest rate fears, there are again rather mixed economic signals today. The global economy will only grow by three percent in 2022, significantly slower than the 4.5 percent expected in December, according to the current forecast by the Organization for Economic Co-operation and Development (OECD).

The global economy is likely to pick up by 2.8 percent next year, after previously expected 3.2 percent. Inflation is expected to rise to 8.5 percent in OECD countries this year and ease off to 6.0 percent in 2023.

German industry is not really getting off the ground

Despite bulging order books, production at German companies is not really gaining momentum due to material shortages and the war in the Ukraine. According to the Federal Statistical Office, industry, construction and energy suppliers together produced 0.7 percent more in April than in the previous month. Economists polled by Reuters had expected a stronger increase of 1.0 percent.

“Companies are still far removed from the pre-crisis level,” says economics expert Jupp Zenzen from the Association of German Chambers of Industry and Commerce (DIHK). “Due to the delivery bottlenecks and increased prices, it is hardly possible for many companies to process their orders in full.”

Financial stocks in the DAX under pressure

In the DAX, the price fluctuations are limited in a rather hesitant stock trading. Papers from Deutsche Bank, Deutsche Börse and the two insurers Munich Re and Hannover Re posted losses of between 1.5 and two percent at midday.

Titles from the industry are also reacting to a weak profit outlook from the major Swiss bank Credit Suisse. Shares in the food supplier Delivery Hero and the plastics specialist Covestro posted the most significant price gains.

Deutsche Bank holds less cash

In most Deutsche Bank branches, cash will no longer be available at the counter in the medium term. “In the future, I no longer want to offer cash in the branches, because holding cash incurs costs,” says Lars Stoy, head of private customer business in Germany. The main task of the branches should be advising customers on investments and mortgages as well as consumer credit and insurance. Then branches would also be profitable again. In most Deutsche Bank branches, notes will only be available from ATMs in the future.

Rheinmetall maintains NATO vehicles

The armaments companies Rheinmetall and Krauss-Maffei-Wegmann (KMW) work together on the maintenance of NATO vehicles in the Baltic States. To this end, the two groups want to set up a joint venture in Lithuania, in which they each hold 50 percent. Its job is to maintain the Boxer armored transport vehicle, the Puma infantry fighting vehicle, the Buffalo 3 armored recovery vehicle, the Leopard 2 battle tank and the 2000 self-propelled howitzer. As part of the Enhanced Forward Presence, NATO countries have currently stationed 1,500 soldiers in Rukla, Lithuania, to secure Alliance territory against possible Russian aggression.

Downside risks for Telefonica Germany?

A negative initial assessment of the Berenberg Bank burdened the papers of Telefonica Germany, which dropped by five percent. According to analyst Usman Ghazi, what is actually a good story about the share is significantly clouded by downside risks for free cash flow and the fact that the dividend is therefore not secured in the long term. Investors would also currently underestimate the competition with Vodafone for customers.

Inditex has the Corona crisis behind it

Zara parent company Inditex has weathered the coronavirus pandemic and managed a jump in profits, despite store closures in Russia and Ukraine. In the period from February to April, net profit increased by 80 percent to 760 million euros. Sales rose in the first quarter of the financial year by 36 percent to 6.7 billion euros. The world’s largest fast fashion group with its brands Zara, Massimo Dutti, Bershka and Pull & Bear has thus exceeded the values ​​of the pre-crisis period of 2019.

Adler shareholders hope for real estate sales

After a press interview with the head of the board of directors, Stefan Kirsten, the shares of the Adler Group have recovered by around five percent today. In an interview with the “Handelsblatt”, Kirsten promised investors up to 1.2 billion euros in cash inflows from real estate deals. In May, Adler papers fell to a record low of EUR 3.80 and thus collapsed by around 65 percent in 2022.

SAF makes new takeover attempt

The commercial vehicle supplier SAF-Holland wants to take over the Swedish brake manufacturer Haldex again. SAF-Holland is offering 66 crowns per Haldex share. The takeover bid corresponds to a premium of 46.5 percent on the previous day’s closing price of Haldex shares. The total value of the offer is the equivalent of 307 million euros. Six years ago, SAF-Holland wanted to take over the Swedish company for around EUR 450 million. At that time, the company got out of a bidding competition.

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