Market report: New hope on the stock exchanges

Market report: New hope on the stock exchanges
Written by insideindyhomes

market report

As of: 05/23/2022 6:09 p.m

Is the trade war between the US and China easing? Vague hopes of this nourished the price recovery at the beginning of the week.

After the loss-making last week on the stock exchange, the signs were pointing to recovery today. The DAX ended trading 1.4 percent higher. The surprisingly positive ifo index had little impact on the mood.

The decisive factor was the strong recovery of the New York stock exchanges. The standard value index Dow Jones is currently 2.1 percent higher.

The battered technology stocks on the Nasdaq also started the new week recovered, albeit somewhat more cautiously. The reasons given were the US government’s considerations of abolishing some of the punitive tariffs on imports from China introduced under the Trump administration in view of the high inflation. Investors see this as a possible de-escalation of the trade war between the two superpowers, commented Pierre Veyret from broker ActivTrade. That apparently outweighed the renewed irritation between the two countries about Taiwan.

ECB signals rate hike in July

However, nothing has changed in the fundamental mixture of inflationary tendencies, rising interest rates and economic burdens. As is always the case in this phase of the interest rate cycle, the markets fear that the central banks could raise interest rates too quickly and thus stall the economy for good.

An end to the net purchases of securities is to be expected “very early” in the third quarter, wrote ECB President Christine Lagarde in an article on the central bank’s website. This would allow for a first interest rate hike in July, according to the Frenchwoman.

The US Federal Reserve has already initiated the turnaround in interest rates. At the next meeting in June, another major interest rate hike is on the agenda of the currency watchdogs around Fed Chair Jerome Powell. By the end of the year, market observers are expecting a base rate of 2.75 to 3.0 percent in the USA.

Lagarde: Bitcoin & Co “worthless”

Lagarde also caused movement on the crypto markets. The head of the ECB described cryptocurrencies as “worthless”. She said this more clearly than ever before. “My very humble assessment is that cryptocurrencies are worth nothing. They are based on nothing, there are no underlying assets that could serve as anchors of security,” Lagarde told Dutch television yesterday.

Following the recent turmoil in the cryptocurrency market, Bitcoin and Ether are trading around 50 percent below their respective highs of the past year. “The $30,000 mark is an important support for Bitcoin,” says wave rider market expert Robert Rethfeld in a recent analysis.

Lagarde strengthens the euro

The statement by the head of the ECB, according to which the era of negative interest rates should end in the summer, pushed the euro exchange rate. The common-currency climbed 1 percent to a four-week high of $1.0684. Higher interest rates make a currency more attractive to investors. It was not until mid-May that the European common currency marked a five-year low of $1.0354.

Gold price extends gains

The weaker dollar is benefiting dollar-denominated commodities as it strengthens non-dollar demand. A troy ounce of gold sells for $1,854 in the early evening.

Oil prices slightly higher

Oil prices are also benefiting from the weaker dollar. The price for a barrel (159 litres) of North Sea Brent will rise slightly until the early evening. Oil prices are still at an elevated level. One important reason is supply concerns about the war in Ukraine.

Takeover bid drives Deutsche Euroshop shares

In the SDAX, the Deutsche Euroshop share caused a sensation. After the takeover bid by major shareholder Alexander Otto and US financial investor Oaktree Capital, the paper rose by 40.1 percent. The stocks of the shopping center investor listed in the SDAX are therefore more expensive than they have been for around two years. The bidding consortium Hercules BidCo is offering EUR 21.50 per share plus a dividend of EUR 1.00.

Deutsche Bank and Commerzbank in high demand

By far the biggest winner in the DAX was Deutsche Bank with a price increase of seven percent. Commerzbank held the top position in the MDAX. Both papers benefited from analyst recommendations. Tom Hallett from the investment bank Keefe, Bruyette & Woods gave a target price of EUR 14.80 for Deutsche Bank shares. Meanwhile, Saurabh Singh from Societe Generale sees Commerzbank as an attractive entry opportunity with a price target of EUR 9.00.

Siemens Energy wants to take Gamesa off the stock exchange

The energy technology group Siemens Energy is reaching for complete control of its Spanish wind power subsidiary Siemens Gamesa. With an offer of 18.05 euros per share, the Munich-based company wants to acquire the outstanding 32.9 percent. That corresponds to around four billion euros. If the offer is successful, Siemens Energy Gamesa wants to be taken off the stock exchange and integrated into the group. This should make the restructuring of the loss-making wind power business more successful.

Daimler Truck joins Manz

Daimler Truck takes a stake of around ten percent in the mechanical engineering company Manz to set up a production facility for batteries for electric trucks. As part of a capital increase, Daimler Truck will become the anchor shareholder of the Reutlingen company with around ten percent, the DAX group announced. A strategic partnership has been sealed to set up a pilot line for the production of lithium-ion cells and battery assembly at the Daimler plant in Mannheim.

BioNTech plans vaccine approval for young children

Children under the age of five need three doses of BioNTech and Pfizer’s Covid-19 vaccine for adequate protection. Three vaccinations generated strong immune responses and high effectiveness, said the Mainz-based biotech company and the US pharmaceutical company. The two partners published the first results from their phase 2/3 clinical study in children aged six months to less than five years. Now the two companies want to apply for approval of the vaccine for this age group – first in the USA and then in Europe.

Merck is expanding production capacities in Ireland

The Darmstadt-based pharmaceutical company Merck is expanding its production capacity for filtration products and membranes in Ireland. Around 440 million euros will be invested in the Cork location for this purpose, and more than 370 new jobs are to be created by the end of 2027. For Merck’s Life Science business sector, which offers products for pharmaceutical research and drug manufacture, it is the largest single-site investment to date.

Gas supply: BMW warns of standstill in the car industry

According to production director Milan Nedeljkovic, BMW is at risk of standstill if the gas supply is reduced. “Around 37 percent of German natural gas consumption is attributable to our branch of industry,” Nedeljkovic told the news agency Reuters. “So not only BMW, but the entire automotive industry would come to a standstill.”

VW luxury brand Bentley is to become fully electric by 2030

According to company boss Adrian Hallmark, the luxury car brand Bentley, which belongs to Volkswagen, is to become a purely electric brand by the end of the decade. “We plan to end engine production by 2030 at the latest,” Hallmark told Welt am Sonntag. “The last combustion engine that we will sell will probably be a GT model. This is the sportiest vehicle, and people will want to buy a classic engine for the longest time with this type.”

RWE boss expects falling gas supplies from Russia

The CEO of the energy group RWE, Markus Krebber, assumes that Russia will gradually reduce gas supplies to Europe. “I expect a further shortage of gas supplies and not that someone will turn off the gas tap completely,” Krebber told the “Frankfurter Allgemeine Sonntagszeitung” (FAS).

Leoni tries to break free

Long-troubled auto parts supplier Leoni is selling another part of its cable business. The cable and wiring system specialist from Nuremberg announced on Monday the sale of its Automotive Cable Solutions business group to the Thai cable specialist Stark Corporation. The sale should flush more than 400 million euros into the coffers of the Franconian supplier. The company only announced on Sunday evening that it was looking for ways to raise around 50 million euros with its creditors. The issue of new shares or a convertible bond will be examined in order to redeem the hoped-for sum.

EU approves AstraZeneca vaccine as a booster

AstraZeneca’s Covid-19 vaccine has been approved in the European Union as the third booster dose for adults. The approval follows a recommendation from the responsible body of the EU medicines agency EMA for use in adults who also received AstraZeneca or one of the mRNA vaccines from BioNTech and Moderna for their first two vaccinations, the company said.

Boeing’s Starliner capsule docks with ISS

After a series of technical setbacks, the space capsule “Starliner” of the US aviation group Boeing has docked at the International Space Station ISS for the first time. The SpaceX competitor announced that the failure of two thrust nozzles did not pose a risk to space flight. In autumn, “Starliner” could carry astronauts into space for the first time.

Is Broadcom buying the software company VMware?

According to insiders, the chip group Broadcom is considering expanding its software business with a billion-dollar takeover. Broadcom and cloud computing and data center virtualization software provider VMware are talking about such a move, Bloomberg news agency wrote, citing people familiar with the matter.

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