Market report: DAX continues to regain ground

Market report: DAX continues to regain ground


Market report

Price increases in US stock markets caused the DAX to close moderately in positive territory. In the end, the main German index closed up 0.38 percent to 17,837 points. Yesterday, the DAX barely registered any changes and stood at 17,770 points at the close of the day.

With mostly nervous trading, the trading range was between 17,720 and 17,863 points. However, with prices below 18,000 points, the outlook remains bleak, according to Helaba market watchers. The mid-share MDAX fared clearly better with an increase of 1.01 percent to 26,189 points.

Overall, the index is currently looking for its direction after entering a consolidation phase after Easter. The background is, in particular, the still unclear monetary policy of the US Federal Reserve (Fed). Many investors find it difficult to digest that the Federal Reserve is postponing the interest rate cut that investors have longed for. Now there is speculation in the markets that the first relaxation could not arrive until September.

Added to this is the fear of an escalation in the Middle East after the Iranian attack on Israel last weekend. It is not yet clear how Israel will respond to the attack. Diplomatic cables shine behind the scenes in this regard. Furthermore, fighting continues in Ukraine with no end in sight.

On the DAX, Sartorius preferred shares were particularly negative among individual stocks after weak quarterly results, with a price loss of 15.3 percent. An unusually severe collapse for a DAX stock.

In particular, Göttingen pharmaceutical laboratory and supplier Sartorius is facing persistently weak demand from China. In the first quarter, sales fell nine percent to 820 million euros. Adjusted for currency effects, there was a 7.6 percent drop. The operating result (Ebitda) fell almost 14 percent to 234 million euros. The bottom line is that profits in the first three months fell to 70 million euros from 116 million euros in the same period last year. The start of the year was weaker than feared, said Odysseas Manesiotis, an analyst at Berenberg Bank.

After a rocky start, Wall Street investors have regained their nerve. The leading Dow Jones index, which at the beginning of the session was already slightly positive, is currently up 0.6 percent. This means that the recent inconsistent trend on the main New York stock exchange continues.

The Nasdaq recently turned positive and gained about 0.4 percent, as did the market-wide S&P 500 index. Big-ticket tech stocks, in particular, are being hit by the paralyzing interest rate discussion, as high interest rates make it more expensive to refinance. The night after the stock market closes, the first quarterly results of the sector are expected with quarterly data from the streaming provider Netflix.

“The US Federal Reserve Bank is partly responsible for the current downward trend in global stock markets,” says Christian Henke, stock market expert at brokerage IG. “The first rate cut scheduled for June will likely be delayed until September.”

However, the Federal Reserve has few options. “Inflation in the US is far from dead and the economy is simply too robust despite numerous interest rate increases,” Henke said.

The completely different interest rate situation in Europe does not help the markets, the influence of the Federal Reserve is too great. According to data from LSEG, European companies’ profits are expected to fall by 12.1 percent in the first quarter compared to the previous year.

The weak earnings could reflect a weakening economy, said Ipek Ozkardeskaya, market analyst at Swissquote Bank. This would give the European Central Bank another reason to cut interest rates, which in turn could increase risk appetite for European stocks.

Several senior ECB central bankers have recently raised hopes that interest rates will fall as early as June, including the bank’s chief, Christine Lagarde. From the perspective of the president of the Bundesbank, Joachim Nagel, the European Central Bank (ECB) could lower interest rates again for the first time in June. The ECB Council has not made any decisions, Nagel told “WirtschaftsWoche.” “We will carefully analyze the incoming data in the coming weeks and then make a decision. But a key interest rate cut in June has become more likely.”

According to the Bundesbank, the German economy has also improved somewhat. “Real gross domestic product (GDP) is likely to have increased slightly in the first quarter,” the monthly report said. Experts had recently assumed a slight drop in economic output at the beginning of the year.

The euro was trending little at $1.0661 in late afternoon trading. The European Central Bank set the reference rate at 1.0679 (Wednesday: 1.0638) dollars.

The euro defends the previous day’s gains. Last week the common currency was under notable pressure against the dollar. However, Antje Praefcke, an expert at Commerzbank, does not expect a change in trend in favor of the euro. The euro has little to counter the dollar.

The assumption that the US Federal Reserve could keep its key interest rates high for longer than expected, given the strong economic data and persistent inflation, currently supports the dollar. “In reality, only a big surprise from the ECB that it does not lower the official interest rate in June could really give a boost to the euro, but in its last meeting, the head of the central bank, Christine Lagarde, already made it quite clear their engagement for June,” writes Praefcke.

In the US, the number of weekly initial jobless claims has not changed. Last week they stagnated at 212,000, as the Department of Labor announced in Washington in the afternoon. Economists expected an average of 215,000 applications.

The number of applications for aid remains at a comparatively low level, indicating that the labor market remains strong. Therefore, hopes for interest rates remain subdued.

Among the individual stocks on the DAX, interest-sensitive banks were in demand, with Commerzbank gaining almost 2.1 percent and Deutsche Bank also gaining. Financial institutions were also supported by a predominantly positive earnings season for the sector in the US.

In contrast, Continental also gained almost 2.8 percent and conquered the top of the DAX. There are also countermoves at Rheinmetall, which lost around 3.7 percent but recently swung from one high to another. Sartorius assets were “alone” at the end of the DAX. On the MDAX, Lufthansa returned to higher demand at a low level after the airline recently reported weak quarterly results.

The European automobile market recorded its first drop of the year in March. According to data from the ACEA manufacturers association, new registrations in the European Union fell by 5.2 percent, to one million vehicles. The association explained that this is due in part to the early date of Holy Week.

There was a -11 percent drop in electric cars. In Germany the drop reached 29 percent, which car manufacturers attribute to the abolition of state purchasing subsidies. Compared to the first quarter, sales increased by 4.4 percent to 2.8 million.

According to a press report, the American electric car manufacturer Tesla wants to lay off 300 employees at its German headquarters in Grünheide. Temporary workers will initially be affected by job cuts starting Monday, online business magazine “Business Insider” reported, citing people familiar with the matter.

Demand for semiconductors for artificial intelligence has boosted the business of Taiwanese chipmaker TSMC. In the first quarter, net profit increased to 225.5 billion Taiwan dollars (6.53 billion euros), compared to 207 billion dollars a year earlier. Sales rose 13 percent to $18.87 billion in the first quarter, slightly more than the group itself had expected. TSMC supplies its products to Apple and Nvidia, among others.

Swiss food company Nestlé is criticized for its baby food. According to an analysis by the Swiss organization Public Eye, which advocates for the respect of human rights by companies based in Switzerland, in some countries the company adds sugar to baby food. Developing and emerging countries are affected, but Western countries like Germany are not. Nestle did not dispute the results of the lab tests when asked.

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