market report
German standard shares started cautiously trading midweek. But the parallels to a strong stock year in 2019 are still striking. This keeps investors hopeful that the price of the DAX will rise further.
The DAX index just fell below the 16,000 mark in early trading. The German standard rose slightly to 15,998 when XETRA trading began. Analyst Thomas Altmann of QC Partners noted that the leading index continues to defy all adversity, bravely defending its annual gain of around 15%. Few investors see any reason to take profits.
Technically, the DAX is eyeing an all-time high of 16,290 and a recent all-time high of 16,322. Compared to 2019 fuel, hopefully those marks will be close again soon. Jörg Scherer, head of technical analysis at HSBC, sees major parallels between the strong start to the year and the price declines in March and May. “If the blueprint is indeed correct, the stock barometer may continue to rise into July,” the HSBC expert predicted.
However, continued speculation about the future course of central banks on both sides of the Atlantic should temporarily prevent large price swings. The Federal Reserve and the European Central Bank meet next week. Investors are wondering whether the Fed will only pause its rate-hike cycle briefly, or if it will pause for a longer period.
The upcoming US interest rate decision once again trapped Wall Street in a tight trading range yesterday. The U.S. standard value index, the Dow Jones, closed almost unchanged at 33,573. The tech-heavy Nasdaq rose 0.4% to 13,276. The S&P 500 rose 0.2% to 4,283.
Negative targets for DAX trading come from Asian equities. Japan’s Nikkei share average of 225 stocks fell 1.8% to 31,913 at the close in Tokyo. The Shanghai Stock Exchange rose 0.1%. The all-important corporate index in Shanghai and Shenzhen fell 0.4%.
Investors were disappointed by an unexpected plunge in China’s exports in May. According to the report of the General Administration of Customs in Beijing, exports from the People’s Republic of China have fallen significantly more than expected in the past month, or 7.5%, compared with the previous year. This again shows that the Chinese economy is not gaining momentum despite the lifting of strict corona restrictions in December.
German economic data also disappointed in early trade. Although industrial production rose 0.3% in April from March, it was still well below economists’ expectations. Commerzbank economist Ralf Solven warned: “If demand does not improve, there are no indications yet that it is only a matter of time before companies shut down.”
The euro was slightly weaker in early trade. In the morning, the common currency was trading at $1.0678, slightly lower than the previous night. The European Central Bank (ECB) set the reference rate at $1.0683 yesterday afternoon. An ounce of gold is currently trading at $1960.
Oil prices tend to weaken again mid-week after sharp surcharges at the start of the week. Disappointing economic data from China dampened buying sentiment among oil investors. A barrel (159 liters) of North Sea Brent crude oil for August delivery was priced at $75.79. That’s 50 cents less than the previous day.
In the DAX, the morning focus is on Rheinmetall shares. The arms group hopes to send more tanks and anti-aircraft ammunition to Ukraine this summer. The company announced yesterday at its production site in Unterlüß (Lower Saxony) that the Federal Ministry of Defense has received an order for 20 Marder infantry fighting vehicles. How much the tank will cost remains unclear. We’re talking about mid double digit million euro amounts.
Good news for network operators like E.ON this morning. According to its president, the Federal Network Agency wants to give electricity network operators higher returns. For the investment in the new system, there could be a future return on equity of around 7.09 percent, Authority Chairman Klaus Müller wrote on Twitter.
Laboratory equipment maker Stratec has expanded its US presence through acquisitions. The SDAX-listed company is acquiring Natech Plastics, a supplier with customers in medical technology, in vitro diagnostics, life sciences and consumer products, in a $30 million deal. From 2024 onwards, acquisitions are expected to have a “neutral to slightly positive impact”, it said.
Steel and processing group Voestalpine achieved record sales and operating results in the past 2022/23 financial year (ended March). Profits, however, fell 11.4 percent to 1.2 billion euros. Nonetheless, shareholders will receive a dividend of 1.50 euros per share, which is 30 cents higher.
US planemaker Boeing has found new defects in its 787 Dreamliner long-range jet following a series of production errors. Boeing is currently investigating some of the planes that have not been delivered to customers and may need to be reworked before delivery. However, based on the current state of knowledge, the issue is not closely related to safety and initially should not change anything about the full-year delivery target.
The U.S. Securities and Exchange Commission has sued Coinbase, another major trading platform for digital currencies such as bitcoin. According to a lawsuit filed yesterday in New York court, Coinbase has offered to trade crypto assets that are classified as securities by the SEC and that the company should have registered as such. Coinbase operated an illegal U.S. stock exchange while also providing certain other financial services without the necessary licenses.