Market Report: Sixth day of losses in a row

Market Report: Sixth day of losses in a row
Written by insideindyhomes

market report

As of: 06/14/2022 6:13 p.m

The downturn on the stock exchanges continues: Fear of aggressive interest rate hikes by the Fed continued to drop the DAX today. Several recovery attempts failed.

There can be no question of a summer party on the stock exchanges at the moment. On the contrary: the mood on the markets continues to deteriorate. In the last six trading days, the DAX has lost a good 1,300 points. Even today, the leading German index fell by 0.9 percent. In the morning he was still on a recovery course before falling back again. In the afternoon he started a second recovery but then turned negative again.

Dow Jones turns negative again

Blame it on Wall Street, which also failed to maintain its initial gains. In the first two hours of trading, the Dow Jones lost around 0.5 percent. The broader S&P 500 also turned negative, down 0.2 percent. The index has officially been in a bear market since yesterday: It has lost more than 20 percent since its high in early January. Only the Nasdaq is still slightly up.

No mood swing

There is currently no sign of a change in mood, says analyst Christian Henke from brokerage house IG. Investors don’t like the current cocktail of inflation, interest rate fears and the resulting fear of recession. “The icing on the cake is another possible lockdown in China.”

Biggest rate hike in the US since 1994?

Marketers are anxiously awaiting the most important event of the week, the US Federal Reserve’s interest rate decision tomorrow evening. Most market participants on the stock markets now expect the Fed to raise interest rates by 0.75 percentage points on Wednesday instead of the signaled 0.5 percentage points. It would be the biggest rate hike since 1994. “Investors have realized that the Fed no longer has the luxury of being able to take its time,” says market observer Jochen Stanzl from online broker CMC Markets.

Producer prices rise again in double digits

Producer prices in the US are still not signaling a slowdown in high inflation. They rose in May by 10.8 percent compared to the same month last year. The increase thus remained clearly in the double-digit percentage range. In April there was an even stronger plus of 10.9 percent revised. A first estimate was 11.0 percent.

Inflation in the US recently rose to 8.6 percent. Several economists already see a wage-price spiral getting under way and fear an economic slowdown. The danger of a recession in the USA is growing.

Update economy from 06/14/2022

Dorothee Holz, HR, 14.6.2022 12:15 p.m

ZEW index slightly improved

Against the background of the serious problems on the stock markets, the positive ZEW index is hardly noticed. After all, the economic expectations of German financial experts have brightened up from a comparatively low level. In June, the ZEW sentiment barometer rose by 6.3 points compared to the previous month to minus 28 points.

“That’s a hint of improvement in the red. In the global environment there is currently little room for optimism,” says Alexander Krüger, chief economist at Hauck Aufhäuser Lampe. Above all, the faltering delivery logistics and the high inflationary pressure weigh on the mood. Confidence will not return until geopolitics gets back on track.”

Euro temporarily below 1.04 US dollars

The euro picked itself up again in the evening and is quoted at $1.0420. At times, it briefly fell below the $1.04 mark. During the night, the common currency cost a low of $ 1.0397, which is less than a month ago. Several economists expect parity later this year.

The strong dollar is putting considerable pressure on the euro. The greenback is currently benefiting from expectations of a decisive turnaround in interest rates in the United States.

Oil more expensive again

Oil prices picked up again today. In the evening, a barrel (159 liters) of North Sea Brent cost 124.62 US dollars – a good 1.9 percent more than the day before. The failure of Russian deliveries cannot be compensated for, said analyst Jeffrey Halley from brokerage house Oanda

The price of a barrel of the US West Texas Intermediate (WTI) variety rose by 1.8 percent to over $123. Oil prices are thus staying at a high level. Since the beginning of the year, they have increased by around 55 percent.

Bitcoin keeps falling

The descent of Bitcoin and many other crypto assets continues. Today, the largest digital currency by market value fell towards the $20,000 mark. The low on the Bitfinex trading platform was around $20,860, the lowest level in a year and a half. The record high was reached in November at around $69,000.

Concerns about inflation and interest rates are the main reasons for the fall in prices. Risky investments such as digital currencies are being burdened by the resolute turnaround in interest rates because they do not generate any current income from interest.

Air France-KLM raises funds

The airline Air France-KLM has collected billions from investors to repay government aid from the Corona crisis. Overall, the group brought in almost 2.26 billion euros with the issue of new shares. The majority of the sum is to flow into the replacement of subordinated bonds in the amount of around 1.7 billion euros, with which the French state had helped the company a good year ago. The remaining proceeds are earmarked for debt reduction.

MorphoSys wants to do research with Pfizer

Biotech company MorphoSys and its partner Incyte are getting Pfizer on board for a new research alliance. In tests, MorphoSys’s cancer drug Monjuvi, combined with Pfizer’s drug lenalidomide and a specific fusion protein, will be administered to blood cancer patients suffering from diffuse large B-cell lymphoma (DLBCL). MorphoSys is thus expanding its research pipeline with Monjuvi, which has already been approved in the USA and is marketed in Europe under the name Minjuvi.

Atos tests split and brings new bosses

The French IT company Atos is reacting to the ongoing headwind with a new company structure. A split into two listed companies is being considered. Atos also announced that CEO Rodolphe Belmer would be leaving the company at the end of September. CFO Uwe Stelter surprisingly announced his retirement in March. Atos recently surprised with two profit warnings within a short period of time. Siemens is a major Atos shareholder.

Evotec agrees cooperation with J&J subsidiary

The biotech company Evotec wants to research new active ingredients together with a subsidiary of the US pharmaceutical company Johnson & Johnson. Evotec will receive research and milestone payments of up to EUR 210 million per project from the collaboration, the company announced. Evotec will receive royalties on potential products resulting from the collaboration.

Trucker strike in South Korea disrupts Samsung’s chip production in China

Samsung Electronics’ semiconductor production in China is disrupted as a result of the trucker strike in South Korea. A South Korean company that produces isopropyl alcohol (IPA) for cleaning semiconductor chips is unable to ship the product to a Chinese company that supplies wafers to a Samsung Electronics chip fab in China due to the blockade of South Korean truckers, trade association Korea International Trade said Association (Kita) with. The export of 90 tons of IPA or a week’s delivery was delayed.

The truckers began walking out on June 7 in order to push through higher wages and a minimum wage guarantee in view of the sharp rise in fuel prices. This is putting further pressure on the supply chains, which are already under strain around the world.

Hornbach Holding lowers profit forecast

The hardware store chain operator Hornbach Holding is more pessimistic about profit development in the current fiscal year due to rising prices and ongoing problems in the supply chains. Adjusted earnings before interest and taxes (EBIT) will fall by a low double-digit percentage in 2022/23 compared to the previous year’s figure of EUR 362.6 million. Previously, Hornbach had only assumed a slight minus. In terms of net sales, however, Hornbach is not making any changes to its expectations for the current year.

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