market report
Whether the Fed will actually pause interest rates is uncertain. A growing number of investors expect the Fed to raise interest rates again. This is also a burden on DAX.
Investors are finding it difficult to find a reason to buy Corpus Christi stock. Fresh interest rate concerns are weighing on global stock prices. The DAX started the holiday trading in the red. At the open on XETRA, the German standard was down 0.1% at 15,951. During the first few minutes of trading, the trend continues down.
As a result, the leading German index rebounded further from the recently troubled 16,000 mark. Technically-oriented investors are now focusing on the upward price gap since last Friday (lower edge at 15,863). If the DAX narrows this gap, the downward momentum in German equities will intensify further. The next important stop loss area for the German leading index will be at 15,700/15,600.
Investors are increasingly concerned that the Federal Reserve could lift its much-anticipated pause in interest rates at its meeting next week and instead raise rates again. Recent decisions by the Bank of Canada have exacerbated those concerns.
The Bank of Canada yesterday raised its key interest rate to 4.75% – the highest level in 22 years – amid mounting price pressures. The Reserve Bank of Australia tightened monetary policy on Tuesday for similar reasons.
“The Bank of Canada’s decision underscores the dilemma facing policymakers,” wrote Commerzbank analyst Charlie Lay. Given the strong growth and persistent inflation, there is a risk of a premature pause. Hence the need to continue to raise interest rates and take more aggressive action.
Investors’ renewed fear of interest rates can be seen in the CME Group’s Fed Watch Tool. Correspondingly, 62.1% of investors currently expect the Fed to pause rate hikes, while 37.9% expect a 25 basis point hike. By comparison: Just a day earlier, just 21.8% expected another rate hike.
Only a handful of economic data are on the agenda today due to public holidays in some federal states and European countries. Equity marketers focused on weekly U.S. unemployment data and final figures on euro zone gross domestic product.
Jörg Angele, an economist at asset manager Bantleon, said data from individual member states suggested the economy shrank by 0.1% at the start of the year. “Given two consecutive quarters of decline in economic output, the euro area, like Germany, meets the common definition of recession among many market participants.”
Negative targets for DAX trading came from U.S. stock exchanges, with interest rate concerns mainly weighing on technology stocks. The tech-heavy Nasdaq fell 1.3% to 13,104 yesterday. The S&P 500 fell 0.4% to 4,268. On the other hand, the Dow Jones Standard Value index closed up 0.3% at 33,665 points.
Central bank rates also rattled investors on Asian bourses. In Tokyo, Japan’s main index, the Nikkei 225 , closed at 31,641, down 0.9%. The Hang Seng index in Hong Kong was last down 0.1%, while the CSI 300 index, which includes the top 300 stocks on the Shenzhen and Shanghai stock exchanges, rose 0.7%.
The euro held above the $1.07 mark this morning. Recently, the common currency was trading at $1.0716, slightly higher than the previous night. Gold prices are also staying put. A troy ounce of the yellow precious metal is currently worth $1946.
Oil prices fell slightly in early trade. In the morning, a barrel (159 liters) of North Sea Brent crude was at $76.81, 14 cents lower than the previous day. A barrel of U.S.-grade West Texas Intermediate (WTI) crude fell 12 cents to $72.41. Concerns about a global economic slowdown have kept a lid on oil prices for weeks.
In the DAX, the morning focus is on Airbus shares. Despite recent parts shortages, the world’s largest planemaker delivered more business jets in May than in any other month since the start of the year. A total of 63 machines were delivered to customers. Airbus delivered 244 commercial jets in the first five months, but that was only a third of its annual target of 720 planes.
Citigroup’s buy recommendation pushed Evotec shares to new highs for the year in Corpus Christi. On top of that, being classified as a possible “biologics maker Tesla” sounds attractive to some investors. Citigroup analyst Peter Verdult also significantly raised his target price from 21.00 euros to 31.60 euros. At best, he even thinks 48 euros is okay.
The soon-to-be-spun Novartis subsidiary Sandoz has the potential to add $3 billion in sales over five years through new products. Additionally, the company promises profit growth and increased dividends. Novartis’ generics subsidiary will be listed separately on the Swiss stock exchange in the second half of 2023.
Investor groups around French billionaire Xavier Niel and asset manager Bruellan want the board of ailing Swiss fund house GAM Holding dismissed and called for an extraordinary general meeting. The group, which claims to control about 9.2 percent of the capital, hopes to restructure the company through a newly appointed body.