market report
The DAX started the last day of the week slightly lower. He continues to struggle with the 16,000 mark – despite Wall Street giving good specs as interest rate speculation wanes.
Over the weekend, the DAX index hovered around the 16,000 mark again. Investors are still taking no risk ahead of next week’s U.S. inflation data and interest rate decisions from the U.S. Federal Reserve and the European Central Bank (ECB).
Germany’s leading index opened slightly lower by 0.04%. The weekly high of 16,114 remains the first directional point up. The 21-day SMA may provide support at the current level of 15,966. It is a short-term trend indicator and is currently trading sideways.
“The DAX has been hovering on this line for several days, so the indicator picture is not clear,” said the expert at Helaba. However, the weekly cloud over the technical outlook prompts caution, especially since the all-time high of just under 16,332 set in the second half of May “has not resulted in any sustained, dynamic upward movement”.
Portfolio manager Thomas Altmann said it was “again suffering from a lack of volatility” after the stock exchange barometer had already traded in a tight range for the first four sessions of the week. “When and in which direction the DAX will break out is completely open.”
However, an unexpectedly marked increase in U.S. jobless claims may provide some optimism at the end of the week. A rather negative signal for the U.S. economy could mean that monetary policy has succeeded in fighting inflation. Correspondingly, interest rate speculation, which had boiled recently, cooled and bond yields fell again. The number of applications is now not far from the 270,000 tipping point. That was seen as a turning point, heralding a sustained slowdown in a labor market that has boomed recently.
In an effort to curb high inflation and cool an overheated job market, the Fed has raised interest rates from near zero to a range of 5.00% to 5.25% since last year. However, in the eyes of most economists, it will now take hold at the next rate meeting. Monetary authorities can avoid raising interest rates to buy time to sift through upcoming economic data. However, Fed Chairman Philip Jefferson recently stressed that this should not be interpreted as a signal that peak interest rates have been reached.
The odds of the Fed raising rates by 25 basis points on June 14 are now one in four, and the odds of a pause in rate hikes are now 75%. However, the market believes that the interest rate hike on July 26 is basically confirmed, with a probability of about 80%. “I wouldn’t bet everything on a rate hike, but I think we should be looking at at least 50%,” said Tony Sycamore, an analyst at IG Markets in Sydney.
The prospect of a rate pause sent prices higher on Wall Street yesterday. The tech-heavy Nasdaq 100 nearly pared Wednesday’s weak losses overnight, rising 1%. The Dow Jones closed up 0.5 percent at 33,833. The S&P 500 rose 0.6% to 4,293.
After the recent setback in Japanese stocks, the Nikkei started to recover today. He rose 1.9 percent to 32,223, with the broader Topix gaining 1.5 percent. Jun Morita of Chibagin Asset Management said the Nikkei’s two-session decline lured investors back on track. It is conceivable that the Nikkei will continue to rise in the new week. The index has risen more than 20% since the start of the year and recently climbed to its highest level in 33 years.
In stark contrast to Japanese markets, there was no buying sentiment in Chinese stocks over the weekend. The Shanghai Composite Index and the Shanghai and Shenzhen Major Companies Index were little changed. Inflation data released this morning dampened market sentiment. Consumer prices rose 0.2% in May. “Weak inflation suggests that economic growth remains below potential,” said Commerzbank analyst Tommy Wu. The latest economic data showed China’s economy slowly recovering after strict coronavirus restrictions were lifted in December amid a slowing global economy and weak domestic demand.
The euro initially maintained the gains made in the previous trading day today. In the morning, the common currency was at $1.0781, unchanged from the previous night. The course had been boosted by weak U.S. jobs data a day earlier. Meanwhile, the Turkish lira hit another record low against the dollar and euro. It doesn’t help that President Recep Tayyip Erdogan has appointed former banker Hafize Gaye Erkan as the new head of the central bank.
Today’s oil prices somewhat extended the previous day’s losses. However, at the end of the week, the movement was within limits. A barrel (159 liters) of North Sea Brent crude for August delivery was priced at $75.43. That’s 53 cents less than yesterday. A barrel of U.S.-grade West Texas Intermediate (WTI) crude for July delivery fell 50 cents to $70.79.
Demand worries are again dominating the oil market, according to traders. The optimism that prevailed earlier this week about Saudi Arabia’s unilateral production cut of 1 million barrels per day in July has evaporated. Citigroup said the measure would not be enough to offset the current weak fundamentals.
Shares of Ceconomy rose sharply today on the recommendation of Exane BNP Paribas. Analyst Stephen Benhamou from the French investment bank halved the target price to 2.70 euros, and now voted “outperform” instead of “neutral”. The electronics retailer’s notes rose nearly 5 percent to 2.30 euros in morning trade. “They’re writing a new chapter,” said analyst Stephen Benhamou, given the streamlining of the organization following the Covergenta deal.
Embattled Credit Suisse and its joint venture partner have begun selling their China securities business in light of an imminent takeover by UBS, according to insiders. Citigroup had previously expressed interest in buying Credit Suisse Securities China (CSS), people familiar with the matter told Reuters. Jane Fraser, chief executive of Citigroup, is in China this week, where Citigroup is building a securities brokerage.
Caltrans has approved the use of Mercedes-Benz’s self-driving system on designated highways. The agency yesterday imposed conditions on the use of the automaker’s Drive Pilot system. For example, it may only be able to run at 60 kilometers per hour during the day. That makes Mercedes the first automaker in California to be allowed to sell or lease cars equipped with such autonomous systems. In particular, he beat out U.S. rival Tesla, for which California is an important market, accounting for 16 percent of global deliveries, according to Reuters calculations.
Binance, the world’s largest cryptocurrency exchange, has suspended deposits in U.S. dollars. The cryptocurrency exchange announced yesterday that its banking partners are also preparing to close withdrawals as early as June 13. Other fiat currencies such as the Euro are not affected. The move comes after the U.S. Financial Services Agency earlier in the day backed the freezing of assets on cryptocurrency exchanges. The SEC sued Binance and its owner, Changpeng Zhao, earlier this week.
Sports car maker Porsche wants to catch up with electric cars. On the occasion of the sports car’s 75th anniversary, the Stuttgart-based company yesterday presented a concept for a new electric sports car. Porsche is still talking about possible series production as a “vision,” according to the press release. So far, the automaker has offered only one all-electric vehicle, the Taycan. By 2030, Porsche wants to deliver more than 80 percent of its new vehicles fully electric.
Tesla opened up its Supercharger charging network for electric vehicles from rival General Motors (GM). As the largest U.S. automaker announced yesterday, General Motors customers will have access to some 12,000 of Tesla’s charging stations starting next year. Tesla’s charging technology is growing in popularity. GM boss Mary Barra spoke of steps that could bring the industry to a flat rate across North America.