market report
Conditions for further price increases are actually favorable, but investors remain in the dark today. Meanwhile, new producer prices pointed to a further decline in inflation.
At lunch, the DAX rose 0.1% to 16,060. “If the DAX index can extend Friday’s upward momentum on Monday, it is expected that the price will rise further to 16,100 points and widen the gap to 16,143 points,” ING’s expert commented. She now expects prices to continue rising as long as the DAX stays above a support area around 15,900.
However, investors are currently cautious. Konstantin Oldenburger, market analyst at CMC Markets, described the situation: “While the German stock index is back above 16,000, potential buyers are afraid to actually enter the trading floor.” A partial loss to the European indices in the month. “It seems that there is more capital transfer from Europe back to the United States, which is not completely incomprehensible, for example, the DAX index has risen by nearly 40% in just eight months,” the expert said.
Donner & Reuschel chief economist Carsten Mumm believes that despite the weak economic outlook, the upward trend in international stock markets is basically intact. Investors are clearly counting on at least a slight pick-up in growth and a pause in rate hikes, Mumm said. “Rate policy is back in the spotlight. The prospect of a rate pause has market participants’ hearts beating faster,” wrote IG Markets market watcher Christian Henk.
Most importantly, the future monetary policy of central banks is currently in the spotlight. European Central Bank (ECB) President Christine Lagarde will address MEPs this afternoon before the European Parliament’s Economic and Monetary Affairs Committee (ECON). Inflation in the euro zone has softened recently. ECB Central Bank President Fabio Panetta said last week that the ECB is close to peaking interest rates. Investors are now hoping for concrete signs of how long the ECB will keep raising rates to keep inflation in check.
In this context, current producer prices in the euro area matter. Their growth was surprisingly slow in April, suggesting that high inflation is waning. Prices at industrial manufacturers rose just 1.0% in April compared to the same month a year earlier, according to Eurostat. This could increase the ECB’s room for maneuver.
However, investors shouldn’t rely on the tailwinds in the U.S. today. U.S. futures are now pointing to a weak start to trading on Wall Street. Experts are currently grappling with how widespread the price increases are across the United States.
Beat Thoma, a market watcher at Fisch Asset Management, noted that market breadth is shrinking to historically rare levels. The vast majority of stocks held by investors have seen nothing since mid-March. “Of the 500 stocks in the S&P 500, only eight stocks are up (Apple, Tesla, Microsoft, Nvidia, Facebook/Meta, Amazon, Netflix and Google/Alphabet),” Thoma emphasized. For everyone else, however, investors lost money. According to Thoma, this is an indirect signal that liquidity is rapidly drying up in financial markets and should soon weigh on investor sentiment.
In Türkiye, high inflation eased further in May. Statistics Bureau data show that compared with the same period last year, consumer prices rose by 39.6%. It rose to around 85% last year and has been falling since then. Compared with the month, consumer prices rose only slightly. The opposition is skeptical of the official figures and argues that real inflation is higher. Istanbul-based inflation research group Enag expects May inflation to be around 109% year-on-year.
Oil prices rallied earlier in the week after Saudi Arabia announced deep output cuts. In early trade, both North Sea-variety Brent and U.S.-variety West Texas Intermediate (WTI) crude prices were up.
Oil major Saudi Arabia on Sunday announced a unilateral output cut of 1 million bpd, initially in July, following a turbulent OPEC meeting. The country actually leads, along with Russia, more than two dozen countries in the OPEC+ oil cartel.
Airlines around the world can expect profits this year to more than double their previous forecasts, after crippling losses from the coronavirus crisis. The industry could post a surplus of $9.8 billion (9.15 billion euros) this year, also due to higher fares, the International Air Transport Association IATA said. In his previous profit forecast for December, he assumed $4.7 billion.
Persil manufacturer Henkel announced further price increases. According to Carsten Knobel, CEO of the “Rheinische Post” (Saturday), more consumer goods must be added this year. Negotiating prices with retail chains is not easy. “We may also no longer deliver individual products if an agreement cannot be reached.”
The manager mentioned commodity and energy prices. For Henkel, these revenues add up to 3 billion euros in 2021 and 2022. “Despite our efforts to save money, this has put a lot of pressure on our margins.”
Airbus is close to receiving a record order from India, according to insiders. India’s low-cost carrier IndiGo wants to order 500 A320 planes from the European planemaker, people familiar with the matter said on Sunday. A deal could be worth about $50 billion at current list prices. However, deep discounts are common in such deals. Airbus declined to comment.
Lufthansa boss Carsten Spohr thinks it is premature to discuss a possible takeover of Portuguese airline TAP. Spohr said the Lisbon government’s privatization of TAP was not yet complete. Furthermore, the Portuguese government plans not to sell TAP directly in the upcoming privatization. Instead, the state wants to ensure “strategic engagement.”
According to its boss Ralph Dommermuth, telecommunications group 1&1 wants to meet the long-standing demands of the Federal Network Agency despite delays in the expansion of its mobile network. Dommermuth told Frankfurter Allgemeine Zeitung that construction capacity has increased. “If things go according to the contractual guarantees of our expansion partners, then we will be able to complete 3,000 locations per year in the next few years.” This will also meet the long-term requirements of the Federal Network Agency. At the beginning of the year, the United Internet subsidiary completed only five, not 1,000 5G radio masts.
The emergency takeover of major Swiss bank Credit Suisse by the larger UBS Group AG is due to close on June 12. UBS announced that Credit Suisse will be merged into UBS at that time. Execution is still subject to approval by the U.S. Securities and Exchange Commission (SEC). UBS itself must also consider the fulfillment or non-compliance of other closing conditions. Credit Suisse shares and their American depositary receipts (ADS) will subsequently be withdrawn from SIX Swiss Exchange and New York Stock Exchange New York.