Status: 05/13/2022 10:06 p.m
Fed Chair Jerome Powell has reassured investors with his statements on future rate hikes. Wall Street and Europe’s stock markets rallied strongly. Tech stocks in particular were in demand at the end of the week.
Interest rate and economic worries have been weighing on world stock markets for days. Investors fear that the Fed will adopt more aggressive rate hikes to combat persistently high inflation. The US Federal Reserve could raise interest rates by 0.75 percent instead of just 0.5 percent at the next meeting in June. Now Fed President Jerome Powell has dampened concerns about a big rate hike. He reiterated the expectation that the central bank will raise interest rates by half a percentage point at each of the next two meetings.
Wall Street on course for recovery
The statements provided relief on the international stock exchanges at the end of the week. Wall Street recovered significantly from the recent price losses. The Dow Jones rose 1.5 percent after falling to its lowest level since March 2021 yesterday. In particular, the hard-hit tech stocks made a comeback. The tech-heavy Nasdaq shot up about 3.7 percent. On a weekly basis, the US stock exchanges still closed in the red.
DAX makes a weekly profit for the first time in a long time
There were also signs of recovery on the European stock exchanges. The DAX gained a lot of ground and closed 2.1 percent higher than the round mark of 14,000 points. On a weekly basis, he gained 2.6 percent. The leading German index ended a week in the black for the first time since the end of March.
No trend reversal yet
However, experts see no real reason for a trend reversal. “Calm is returning, but with no fundamental news to suggest the bottom is in,” said Fawad Razaqzada, market watcher at Forex.com. Because the negative factors that had sent prices plummeting in the past few weeks have not disappeared: the Ukraine war is raging on, the US Federal Reserve is in the middle of a cycle of interest rate hikes and China is fighting the resurgence of the coronavirus pandemic with strict lockdowns , which puts a strain on economic processes worldwide. “Should the economy cool down, things could get uncomfortable on the markets,” warned market observer Christian Henke from brokerage house IG.
Economy update 05/13/2022
Klaus-Rainer Jackisch, HR, tagesschau24 09:00 a.m., May 13, 2022
Bitcoin back above $30,000
However, the economic fears were pushed aside today. Bitcoin investors also used the recent price losses to re-enter. The oldest and most important cyber currency gained a good seven percent to $30,542. “It remains to be seen whether the recovery attempt will be sustainable,” said analyst Timo Emden from Emden Research. “All of the recent countermovements were of a temporary nature and were regularly sold off again.”
Oil a little more expensive again
The discussion about an EU embargo on Russian oil supplies drove oil prices up again. The Brent variety from the North Sea rose in price by three percent to $110.78 per barrel (159 liters). However, speculation about lower demand from the most important customer, China, slowed the rise because of the economic risks there. Ongoing lockdowns in Shanghai are straining the economy and supply chains.
Industrial production in euro zone shrinks
The probability of an economic slowdown or even recession in Germany is increasing. Eurostat reported today that industrial production in the euro zone fell by 1.8 percent in March compared to the previous month. In addition to the further rise in energy prices as a result of the Ukraine war, industrial companies are still struggling with the acute shortage of important primary products such as semiconductors. This problem was also partly exacerbated by the Russian invasion, since, for example, cable harnesses made in Ukraine were missing from eurozone car production.
Twitter on the decline
Speculations of an end to the takeover by Elon Musk are sending Twitter plummeting. Twitter shares plummet 11 percent. Tesla boss Elon Musk put his $ 44 billion takeover on hold and justified this with missing information on the number of spam and false accounts at the short message service. Tesla shares gained 6 percent.
Utility EnBW earns more
The energy group EnBW announces that the adjusted operating result (Ebitda) rose by around 46 percent to 1.2 billion euros in the first quarter. Higher electricity prices, better wind conditions for onshore and offshore wind turbines and newly commissioned solar parks all contributed positively to the result. The group is also making good progress in replacing the purchase of Russian gas and coal. As early as mid-August, EnBW will no longer purchase coal from Russia.
Freenet confirms forecast
After a mixed start to the year, the mobile communications provider Freenet is sticking to its forecast for 2022. Sales in the first quarter fell slightly to EUR 616.8 million compared to the corresponding period of the previous year. Freenet thus missed the average expectations of analysts. Earnings before interest, taxes, depreciation and amortization (Ebitda), on the other hand, rose to 118 million euros, beating consensus.
Increase in sales at Telekom
In the first quarter, Deutsche Telekom’s revenue increased by 6.2 percent to a good 28 billion euros. Europe’s largest telecom group benefited from its service revenues, which grew at a disproportionately high rate. At 2.2 billion euros, net profit was almost twice as high as a year ago.
Impetus for Deutsche Euroshop
The real estate group Deutsche Euroshop, which specializes in shopping centers, benefited from the easing of corona restrictions in the first quarter. While sales in the first quarter increased by only 0.3 percent year-on-year to 52.1 million euros, earnings before interest and taxes (EBIT) rose by almost a quarter to 39.3 million euros, as significantly lower valuation allowances on rent receivables were made became. The bottom line is that profits increased by almost ten percent to 24.5 million euros.
Ceconomy returns to growth path
The electronics retailer Ceconomy also benefited from the recovery of its stationary business in the second quarter of the 2021/22 financial year. Sales rose from 4.3 billion to five billion euros, as the holding company of the two chains Media Markt and Saturn announced. Adjusted for currency and portfolio effects, this was growth of 18.8 percent. Corona-related store closures had led to a decline in the first quarter. The operating loss (EBIT) adjusted for special effects fell from 146 million euros to 62 million euros.
Vitesco gets many orders in the electrical division
Auto parts supplier Vitesco is making good progress collecting orders for its electric drive division. In the first quarter, orders for electrical components, at just under EUR 3.7 billion, accounted for the lion’s share of the EUR 4.5 billion in orders received. The division for e-drives still has relatively low sales at the company spun off from the automotive supplier Continental and is still in the red, but should be the mainstay in the future.
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