market report
Investors have turned to European stocks on hopes that the U.S. rate hike cycle is coming to an end. The Federal Government’s New China Strategy is also in focus today.
Stocks regained momentum after a quiet start to the day. The DAX index held on to the 16,000-point mark left the previous day. Germany’s leading index closed up 0.7% at 16,141. Not only recorded the fifth consecutive day of profit, but also made up for the previous four consecutive losses. Meanwhile, the MDAX of mid-cap stocks rose just 0.16% to 27,996.
The technical picture of Germany’s DAX index also gained further clarity. He had already returned to the 100-day line on Tuesday. Experts believe that it is of great significance to the medium and long-term trends. Germany’s main stock index also broke above its 21-day and 50-day lines on Wednesday. They are considered indicators of short- to medium-term trends. Therefore, market watchers believe that the price will continue to rise and set the month’s high of 16,209 as the next target.
U.S. stocks continued their recent moves today. New York’s leading index, the Dow Jones Industrial Average, rose 0.18% to 34,410. The S&P 500 rose 0.52% to 4495. The tech-heavy Nasdaq 100 rose 0.99% to 15,458, unchanged from January 2022 levels.
“Investors are celebrating the end of the Fed’s rate hike cycle,” wrote Jochen Stanzl, an analyst at brokerage CMC Markets. The Fed could ease restrictive monetary policy again if U.S. inflation slows. This is also supported by US producer prices released today, which edged up just 0.1% in June compared to the same month last year. That’s what the Labor Department announced today.
But there are also more cautious voices. Neil Wilson of brokerage Markets.com warned, “The temptation is that you exaggerate the significance of one month’s data. The Fed will remain higher for a longer period of time.” Experts believe that a 0.25 percentage point hike in late July is almost definitely.
Especially since the sentiment might be a bit too optimistic, especially considering the European market. Because the ECB’s monetary watchdog did not rule out further rate hikes at its most recent rate meeting in June: “We believe that, if necessary, the ECB’s Governing Council could consider raising rates after July,” it said in a statement. said in the agreement released today. In particular, persistently high core inflation, which excludes volatile energy and food prices, worried participating euro watchdogs.
Meanwhile, disappointing Chinese economic data faded away. China’s foreign trade collapsed in June. Exports fell 12.4% year-on-year to around $285 billion, Beijing customs officials said. Imports from the second-largest economy fell 6.8 percent to around $215 billion. The main reason for the sharp decline in China’s exports is the weak dynamics of the world market.
China will release second-quarter growth figures next Monday. Recently, some experts have discussed possible deflation in China. “Even if this situation has not yet won the support of the majority, the deflationary trend in China poses an export risk for us,” said Jochen Stanzl, chief market analyst at CMC Markets. “Many companies use inflation as an excuse to raise prices excessively, while They now face high prices amid a slowing economy. This could end up fueling deflationary trends.”
Meanwhile, the Federal Cabinet today approved a new China strategy, according to government sources. The core idea is to de-risk the economic relationship to eliminate dependence on China without cutting off ties with Germany’s largest trading partner. Leading business associations have welcomed the new strategy. “A ‘de-risking’ strategy is the appropriate approach to Chinese politics,” says DIHK president Peter Adrian. Industry president Siegfried Russwurm also speaks of the right strategy.
The euro extended sharp gains from the previous session, having risen to just below $1.12. Common currencies continue to benefit from dollar weakness. In the afternoon, the euro traded at $1.1195 against the dollar, the strongest since March 2022. The European Central Bank (ECB) set the reference rate at $1.1182. Therefore, 1 USD is exchanged for 0.8943 EUR.
Oil prices also continued to rise. The current price of a barrel (159 liters) of North Sea Brent crude oil is $80.16, up 0.09% from yesterday. Prices were boosted by a weaker dollar. If the U.S. dollar falls, demand from other currency regions tends to increase. This is mainly due to exchange rate effects, as oil is mainly traded in US dollars.
Major U.S. bank JPMorgan Chase lost shares it held for Russian clients, according to its own statement. Given the turmoil caused by Western sanctions and Russian counter-sanctions during the Ukraine war, financial institutions such as Deutsche Bank have admitted that Rabobank does not hold any shares in Russian companies. In a July 12 letter to investors, the U.S. bank said it was seeking to regain a stake in retail chain Magnit.
Disney boss Bob Iger announced fewer, cheaper productions today on CNBC. Marvel, in particular, is overloaded with many episodes on its in-house streaming service, Disney+. Overall, Disney is spending too much money on making streaming content and not paying enough attention to profitability. Iger’s contract has just been extended for another two years until the end of 2026 and he is ready to overhaul the group. He explicitly questioned whether, in the long run, ABC broadcaster’s classic TV business would still belong to Disney, but sports broadcaster ESPN would.
US oil major ExxonMobil is looking to bolster its carbon dioxide storage business with a multibillion-dollar takeover of US energy group Denbury. Denbury operates the largest network of carbon dioxide pipelines in the United States. The group specializes in pumping climate-damaging natural gas into old oil production sites to press out the residue there. ExxonMobil announced today that it will offer Denbury shareholders 0.84 of its own common stock, valuing the company at $4.9 billion. The acquisition is expected to close in the fourth quarter.
Siemens is investing 500 million euros in its digital industrial site in Erlangen. As CEO Roland Busch said today, together with the projects already announced, planned investments in Germany amount to around $1 billion. Erlangen’s research and production capabilities will be expanded. It also created new jobs — however, how many jobs Bush left behind. Siemens has announced a €2 billion investment program worldwide, including projects in Germany, some of which (including the US, China, Singapore and Spain) are already known.
The technology company Bosch has started serial production of hydrogen-based drives at its traditional plants in Stuttgart-Feuerbach and Chongqing, China. The pilot customer is Nikola Corporation of the United States, and there are four series of orders from Europe, China and the United States. During the first expansion phase, thousands of systems will be produced each year. “We want to add another zero in the next few years,” said Markus Heyn, managing director of Bosch’s key suppliers division.
Passenger traffic at Frankfurt Airport continued to grow in June. According to statistics from airport operator Fraport AG, the total number of passengers at Germany’s largest aviation hub was about 5.6 million last month, an increase of 11.3% over the same period last year. Compared to June 2019 before the outbreak, transaction volumes were down 15.6%. The backlog rate was 17.5% in May.
Delta Air Lines once again raised its profit forecast for the current year, thanks to strong air ticket demand. Management talked about record sales and record profitability in the second quarter. The airline announced today that it expects adjusted earnings per share (EPS) to rise to $6 to $7. The group confirmed its forecast for sales growth of 17% to 20%.
In addition, Delta Air Lines announced today that the group will order an additional 12 A220-300s from Airbus. The positive outlook saw U.S. airlines enjoy strong gains at the start of trading: Delta opened 1.2 percent higher, while rival United rose 1.1 percent.
Google has launched Bard, an AI text bot, in Germany and the EU. Bard’s biggest update includes support for the most commonly used languages, including German, Arabic, Chinese, Hindi, and Spanish. So far, Bard can only be operated in English, Japanese and Korean. With Bard, Google is countering the success of startup OpenAI’s text bot ChatGPT.
Energy groups BP and Totalenergies have been awarded contracts to build four large wind farms in the North and Baltic seas. The British and French groups have agreed to pay a total of 12.6 billion euros, the Federal Network Agency said. These wind farms have a potential combined capacity of 7 GW – Germany currently has 8 GW of offshore capacity.
A boom in business after Asia lifted coronavirus-related travel restrictions is boosting shares in watchmaker Swatch. The global market leader from Switzerland posted an 18 percent increase in sales in the first six months of the year and a 36.4 percent increase in operating profit. The Bernstein analyst spoke of a “brilliant first half”.
The bad news from the chemicals industry continues: industry leader BASF has also had to cut its annual targets, following specialty chemicals companies Lanxess, Evonik and Clariant. The world’s largest chemical company expects sales of just 7.3 to 76 billion euros in 2023, with adjusted operating profit (EBIT) of 400 to 4.4 billion euros. So far, the company expects adjusted profit to fall to 4.8 to 5.4 (2022: 6.9 billion) euros and sales to fall to 8.4 to 8.7 (87.3) billion euros.
For the German insurer, the multibillion-dollar loss of U.S. investors to the Allianz hedge fund is finally over. The judge upheld the settlement negotiated by Allianz and U.S. authorities. In the spring of 2020, as financial markets collapsed at the start of the COVID-19 crisis, the “structural alpha” hedge fund of US subsidiary Allianz Global Investors (AGI) lost about $7 billion, and US pension funds and other large investors lost about $7 billion. Dollar. Allianz announced it would compensate investors with about $5 billion and pay $840 million to the state coffers.