Market report: investors remain nervous |

 Market report: investors remain nervous |

Market report

After a major correction at the end of last week, the DAX stabilized at the beginning of the week. Although the losses brought out the first bargain hunters, the main German index has only offset a small part of its recent losses.

In the end, the DAX closed up 0.37 percent to 18,068 points. This means that the index has stabilized a bit, but currently it is not enough to do more. An initially stronger countermove in the early hours of trading in response to the losses of the last two trading days quickly faded throughout the morning. In general, the index ranged between 17,969 and 18,149 points. Last Friday, the main German index fell 1.4 percent to 18,002 points; in two days it had lost 3.7 percent.

If the German benchmark’s recovery fails and the 18,000-point mark falls sustainably, the mood could “change significantly,” warns portfolio manager Thomas Altmann of QC Partners. However, no recovery is in sight for the MDAX, which lost around 0.9 percent and fell just below the 25,500 point mark.

In addition to political uncertainty in France and discussion of a tariff dispute between the EU and China, the US Federal Reserve’s continued reluctance to cut interest rates is also deterring investors from taking risks.

“The DAX has lost a good 1,000 points since mid-May,” writes Jochen Stanzl, market expert at CMC Markets, in his daily commentary. “Not only is a trade conflict brewing with China, but also an intra-European conflict over the punitive tariffs imposed on Chinese electric vehicles. The new elections in France are also worrying,” he estimates.

In the neighboring country there is the threat of a massive shift to the right and, as a result, a further deterioration of already strained state finances. Yields in the French bond market have already risen significantly, a clear warning sign. The rating agencies have also already warned this.

The situation on the stock market is therefore likely to remain tense, at least in the coming days: “Investors should expect noticeably stronger market fluctuations until the election and in the weeks after than recently,” comments Ulrich. Stephan, chief private sector investment strategist. and corporate clients of Deutsche Bank. “By now, many expectations and concerns have likely been factored into stock and bond prices.”

Investors are also unlikely to like the current economic data from China due to the export orientation of the German economy: Chinese industrial production weakened in May and fell short of analysts’ expectations. While it rose 5.6 percent year-on-year, it slowed from 6.7 percent in April, according to official data from the National Statistics Office (NBS).

However, retail sales surprised positively. This figure increased 3.7 percent in May, 1.4 percentage points more than in April. Analysts only expected an increase of 3.0 percent.

The example of Adidas currently shows the importance of the Chinese market. Shares of the Franconian sporting goods giant continued to fall today in the midst of a major sporting event such as the European Football Championship and are among the biggest losers on the DAX. The shares fell below the support of around 220 euros and lost around 2.6 percent.

As reported by Bloomberg news agency, the sporting goods maker is investigating anonymous complaints about corruption by individual employees in China. Jürgen Molnar, capital market strategist at brokerage RoboMarkets, highlighted the importance of the Chinese sales market for Adidas. The accusations could jeopardize Herzogenaurach’s goal of finally regaining a foothold in the Middle Kingdom after the huge crises of the past four years.

“To have a chance of continuing the bullish trend, the problem should be resolved quickly,” the expert continued. At the beginning of June, newspapers marked their highest price since February 2022, at more than 236 euros. Since the beginning of the year, the increase is still almost 18 percent.

Investors in US stock markets are taking it easy at the beginning of the week; Fluctuations in major stock indices are manageable. Attention remains focused on the Federal Reserve’s interest rate policy, but also on the seemingly endless hype around artificial intelligence (AI), which continues to push technology indices to new highs despite concerns about interest rates. Also today, the Nasdaq 100 selection index has so far reached a new record of 19,741 points.

“There is no real selling interest right now because the expectation is that the momentum will continue and the stock will continue to gain,” said analyst Daniela Hathorn. The worrying thing, however, is that the rally is being driven primarily by a few stocks. Investors were awaiting new information on the future path of interest rates from the US Federal Reserve from new economic data throughout the week, such as May retail sales or industrial production.

Investors are weighing prospects that the Federal Reserve may begin easing monetary policy later this year against fears that the recent rally is showing signs of being overdone, market sources say. US economic data provided little boost at the start of the week. The industrial environment in the US state of New York improved significantly in June.

Meanwhile, central banker Neel Kashkari, president of the Minneapolis Federal Reserve, believes it is realistic for monetary authorities to lower the key interest rate in December. However, we need to see more evidence of a decline in inflation, he said in an interview with CNBC.

As at the open, the bond market is weakening and the US ten-year bond yield has risen to 4.29 percent. Two-year securities, less sensitive to prices, offer their buyers just over 4.75 percent.

Among individual stocks, shares of semiconductor company Broadcom continue their recent record rally. They are currently up 3.7 percent, having gained about a third since the beginning of June. Shares of competitor Micron also gained more than three percent by midday local time. The roles of the leader Nvidia, on the other hand, are giving way slightly.

Along with Nvidia, Broadcom is considered one of the main beneficiaries of the AI ​​hype. The previous week, shares rose significantly after Broadcom caused excitement among investors with strong quarterly numbers and a stock split announcement. This also led to numerous price target increases by analyst firms.

The euro exchange rate is currently stabilizing at $1.0722. The common currency fell on Friday to its lowest level since early May. The background is persistently high interest rate expectations in the US, but lately also political uncertainty in France. The European Central Bank (ECB) set the reference exchange rate at 1.0712 (Friday: 1.0686) US dollars.

Diagnostic specialist and laboratory supplier Qiagen wants to grow faster and increase profitability in the coming years. The DAX Group announced today at a capital market day that the goal is to achieve annual growth of around seven percent on average at constant exchange rates by 2028. The company also announced that it would return at least $1 billion to the shareholders between 2024 and 2028.

The market share of purely electric cars in Germany among new registrations fell to twelve percent in the first five months of the year, compared to 14.3 percent in the same period last year. As the Federal Highway Transportation Authority announced, the number of newly registered battery electric vehicles fell by 16 percent to just under 141,000. The market leader from January to May was Volkswagen with almost 20,000 electric cars, followed by Tesla and BMW. With the end of government funding for electric vehicles at the end of last year, demand fell noticeably. Qiagen shares rose on the DAX.

Medical technology group Carl Zeiss Meditec has cut its outlook due to an unexpectedly slow recovery in the device business. Business in April and May was lower than a year earlier, the company said.

For this reason, Carl Zeiss expects sales of around two billion euros for the current year (until the end of September). Previously, the target was between €2.1 billion and €2.15 billion. The operating result (EBIT) is expected to reach between 215 and 265 million euros and is therefore well below the previous target of a comparable level to the previous year of a good 348 million euros. On the MDAX, Zeiss shares sharply lost around a fifth of their value and were clearly at the bottom of the index.

Pfeiffer Vacuum will have to leave SDAX shortly. According to Deutsche Börse, the vacuum pump manufacturer did not publish its quarterly financial report on time. The stock exchange operator announced that the stock will therefore no longer be represented in the index of smaller shares as of Monday (June 24). Therefore, the announced exclusion of Thyssenkrupp Nucera is void. The electrolysis specialist will remain at SDAX.

Changes in indices are particularly important for funds that replicate indices in real terms (so-called physical replication ETFs). Then there needs to be a reallocation, which can have a short-term impact on share prices.

Eventually, McDonald’s wants AI to take orders in restaurants. After about two years, the fast food restaurant chain in the US will complete a test run in more than 100 establishments, as the specialized publication Restaurant Business reported over the weekend, citing a message to restaurants. McDonald’s made it clear that the step tested together with the computer company IBM was not the end.

The large Swiss bank UBS wants to clarify things about the Greensill matter, which was taken over as part of the acquisition of Credit Suisse. A voluntary bailout offer will be made to investors in the collapsed supply chain finance funds of collapsed Greensill Capital, the bank announced. UBS therefore assumes a burden of almost one billion dollars.


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