market report
Anyone hoping for a countermovement in the DAX at the end of the week was disappointed today. The leading German index fell further to 15,574 points, a daily loss of 0.65 percent. However, the DAX was still able to limit the losses in the late afternoon after falling to a low of 15,473 points for the day. In doing so, he followed a somewhat stabilizing Wall Street. On a weekly basis, this results in a minus of around 1.6 percent. The MDAX for medium-sized companies fell by 1.33 percent to 27,153 points.
The next technical support line in the DAX is now the July low at 15,456 points, after the index broke the 15,700 point mark yesterday and broke down from a sideways movement between 15,700 and 16,000 points.
“The air from the stock market seems to be gone and the rally break since the beginning of the month has not yet ended,” wrote analyst Konstantin Oldenburger from the trading house CMC Markets.
In addition, contrary to investor hopes, interest rates could remain high for a longer period of time. “There is a notable repricing of longer-term interest rates,” said Blackrock Investment Institute strategist Jean Boivin. The market is increasingly coming to believe that despite recent progress, there will be long-term inflationary pressures. Macroeconomic uncertainty will persist for years to come, requiring greater compensation for holding long-dated bonds in the form of high interest rates.
The background to the currently poor mood in the market is concerns about economic growth in China after the recent weak economic data, but especially the unclear interest rate of the US Federal Reserve (Fed). The minutes of the Fed’s most recent interest rate meeting, which were published on Wednesday, left the markets in the dark in this regard, which has caused uncertainty around the world ever since.
Regarding China, problems at the real estate giants Evergrande and Country Garden have recently caused tremors about the state of the Chinese economy. China’s central bank is likely to try to boost the sluggish economy by lowering key interest rates on Monday. Evergrande filed for bankruptcy protection in the United States today, adding fuel to the fire.
Investors are also worried about a slowdown in the global economy. The danger for the global capital markets is less of a direct risk of contagion from the real estate and shadow banking sector, says Björn Jesch, global investment manager at Deutsche Bank fund subsidiary DWS. Rather, it lies in the speed with which the mood has changed: “While China was still considered a beacon of hope for global growth at the beginning of the year thanks to the reopening fantasy, the country is now considered a stress factor.”
At the same time, the guesswork about the future monetary policy course of the US Federal Reserve continues. The main focus will be on the annual conference of monetary authorities in Jackson Hole starting next Thursday. “It is uncertain whether they will come to any new conclusions about the interest rate increase path in the Rocky Mountains,” write the experts at Helaba.
The motto of this year’s three-day meeting of central bankers in the US state of Wyoming is “Structural changes in the global economy”. Investors are hoping for a hint as to how interest rate policy in the USA will continue. Last year, Fed Chair Jerome Powell used the forum hosted by the Kansas City Fed District to proclaim a long fight against inflation.
On Wall Street, investors have taken a bold step again after opening losses. Nevertheless, the risk of another losing day remains high. Because only the leading index, the Dow Jones, rose slightly by 0.1 percent, although it had not lost so much before. The interest-sensitive technology exchange Nasdaq remains a good 0.4 percent in the red, but has now also reduced its losses. The market-wide S&P 500 index is struggling with its closing price.
Concerns about China are also on the agenda in New York, as is the interest rate policy of the Fed. “Investors are looking at better-than-expected economic data and saying the Fed probably isn’t tightening enough just yet,” said Art Hogan, chief markets strategist at wealth manager B Riley Wealth.
Oil prices fell today. However, the losses were limited after the prices had fallen more sharply during the week. A barrel (159 liters) of the North Sea Brent for delivery in October last cost 83.84 US dollars. That was 30 cents less than the day before. The price of a barrel of American grade West Texas Intermediate (WTI) for September delivery fell by 15 cents to $80.24.
With the current losses, the oil market is heading for the first week of price declines since June. Above all, concerns about continued weak economic development in China had weighed on oil prices recently.
“However, we do not think that oil prices are now on a sustained decline,” commented Commerzbank’s commodity experts. According to their assessment, the oil market is clearly undersupplied in the third quarter due to severe production cuts in the important producing countries Saudi Arabia and Russia. “We therefore expect prices to recover in the next week,” says an analysis by Commerzbank.
After the recent losses against the dollar, the European common currency stabilized below the $1.09 mark at the end of the week. The euro is currently trending sideways at $1.0873. The European Central Bank set the reference rate at 1.0867 (Thursday: 1.0900) US dollars.
Retail lacks clear impulses. Inflation data in the euro zone did not move the market. The second estimate for July confirmed the numbers from the first estimate. The inflation rate fell slightly to 5.3 percent. However, the core inflation rate remained at 5.5 percent. The ECB’s medium-term inflation target of two percent is still clearly exceeded.
The digital currency Bitcoin continues to suffer from the prospect of higher interest rates on the bond markets in the longer term. There is also a report of a sale of Bitcoin holdings by US billionaire Elon Musk’s company SpaceX. Bitcoin price continues its previous day’s slide and falls below $26,000, its lowest level in two months.
The Suse share from the SDAX was in the limelight among the individual stocks on the German stock market. Stocks of the Linux software company shot up almost 60 percent. The Swedish financial investor EQT wants to take the Nuremberg company off the stock exchange a good two years after its IPO. EQT announced on Thursday evening a takeover offer to the remaining shareholders for 16 euros per share, with which Suse is valued at 2.72 billion euros.
The Volkswagen Group continues to suffer from the cooling demand for new cars. With 773,000 vehicles from all group brands, 6.6 percent more cars were delivered in July than in the weak month of the previous year, as the group announced on Friday. In the first half of the year, the increase was still 12.8 percent due to the high order backlog from the previous year.
The car manufacturer Mercedes-Benz continues to have problems with possibly faulty fuel pumps. After a major recall in the USA, the group is now calling 231,249 cars into the workshops in China, as the Chinese supervisory authority SAMR (State Administration for Market Regulation) announced in Beijing today.
The Austrian entrepreneur Stefan Pierer has been the new sole owner of the ailing Nuremberg car supplier Leoni since Friday. The entry in the commercial register was made in the morning, and stock trading on the Frankfurt and Munich stock exchanges will end during the day, a company spokesman said.
After the Adyen share price fell the day before, it continued to fall at the end of the week. Price target reductions rained down, and some analysts also withdrew their buy recommendations. On the previous day alone, after catastrophic quarterly figures, around 40 percent of Adyen’s stock market value, around 18 billion euros, was destroyed in one fell swoop.
The Swiss pharmaceutical company Novartis is pushing ahead with the IPO of its generics division Sandoz. Shareholders will receive one Sandoz share for every five Novartis shares they hold. Novartis plans to list Sandoz on the SIX Swiss Exchange and offer American Depositary Receipts (ADRs) in the US. The Sandoz spin-off is scheduled to take place on October 4, 2023.
Applied Materials exceeded market expectations with its forecast for the fourth quarter. The chip supplier assumes sales of 6.51 billion dollars (plus or minus 400 million dollars) and referred to billions of dollars in subsidies from the governments in the USA, Europe and Japan for the construction of chip factories.
