market report
Fears of further U.S. rate hikes and weak German industrial production data are forcing the German DAX to fall deeper and deeper. The weekly balance should be catastrophic.
The DAX opened the week’s final session down 0.2 percent at 15,496. Yesterday alone, Germany’s leading stock index fell 2.6% to 15,528.54 points, getting further and further away from the important psychological mark of 16,000 points. It is currently more than four percent negative on a weekly basis.
“Market sentiment is low,” commented Thomas Altmann, portfolio manager at QC Partners. “The DAX dipped below the low of 15,500 yesterday, reaching levels last seen in early February for the first time. That equates to five months of no gains.”
Helaba analysts determined that the important support area at 15,600/15,700 has been broken. According to their assessment, a break below this area should lead to an extension of the correction to 15,210. HSBC experts said that the stock index must regain this “key area” as soon as possible to avoid negative impact. “Otherwise the DAX is under threat of a real summer decline.”
Fundamentally, concerns about further U.S. rate hikes are weighing on stocks. Commerzbank analyst Antje Praefcke predicts that economic data will now be decisive for the Fed’s further actions. Investors are therefore eagerly awaiting today’s official monthly U.S. jobs report. “However, positive surprises are pretty bad news for the stock exchange because they are more likely to lead to longer rates and higher rates,” Altman said.
If the forecasts are followed, the US labor market will continue to develop positively. Strong job growth is possible and wage growth is likely to remain buoyant, Heraba experts said. “Combined with the fact that the unemployment rate is unlikely to rise, interest rate expectations remain elevated.”
Recently, the U.S. economic data has generally been positive. This has consequences: Deutsche Bank investment strategist Ulrich Stephan commented that financial markets are taking this as a sign that key U.S. interest rates may remain high for longer than previously expected.
In addition to concerns over interest rates, Germany’s growing economic problems also weighed in: German companies unexpectedly reduced output in May. According to the Federal Statistical Office, the total output of industry, construction and energy suppliers fell by 0.2% from the previous month. Economists polled by Reuters expect the economy to stagnate.
Carsten, chief economist at ING, commented: “Despite an increase in output in May, production expectations continue to be weak, orders have fallen sharply, and inventories continue to build. This toxic combination bodes well for further growth in the sector in the months ahead. Disappointed.” Brzeski.
Fresh worries about interest rates also hit U.S. stocks. The Dow Jones index closed down 1.1% yesterday at 33,922 points. The tech-heavy Nasdaq fell 0.8% to 13,679. The S&P 500 fell 0.8% to 4411.
In Asia, signs are also negative: Tokyo’s Nikkei, which has risen about 25% this year, fell 1.2% to 32,388 today. The broader Topix fell nearly 1%.
Chinese stocks also fell. The Shanghai Composite Index fell 0.2%, while the Shanghai and Shenzhen Major Enterprises Index fell 0.3%. China’s economy has lost steam over the past three months after a surprisingly strong first quarter. According to traders, investors are now waiting to see whether the Chinese government will take broad measures to support the economy. The U.S.-China trade dispute, which has recently reached a fever pitch, is also causing turmoil.
Shares in hydrogen plant maker Thyssenkrupp Nucera rallied when it first went public. In the morning’s first session on the Frankfurt Stock Exchange, it was priced at 20.20 euros. Shares were issued at a price of 20 euros, roughly in the middle of the subscription range. 39% of the 605 million euro issuance went to two main investors, funds of BNP Paribas and Saudi Arabia’s sovereign wealth fund PIF. Therefore, these notes cannot be traded for the time being. In fact, only about 15% of Nucera’s stock is free float.
Samsung’s consolidated profit fell 96 percent to 600 billion won (420 million euros) in the April-June period due to losses in its key chip division. Samsung said it was its lowest quarterly profit in 14 years. Last year, the company reported a profit of 14.1 trillion won ($9.8 billion) for the same period. Sales are expected to fall 22% year-on-year to 60 trillion won, Samsung said.
A management working group and a special committee of the supervisory board will help Siemens Energy resolve ongoing problems in its wind power business. DPA quoted supervisory board circles as saying that the special committee held its first meeting last night. According to reports, his job is to monitor the handling of wind turbine quality problems, which Siemens Energy had to withdraw its forecast at the end of June.
Automaker BMW posted a notable increase in vehicle sales in the second quarter. The Munich-based company sold a total of 626,726 BMW, Mini and Rolls-Royce vehicles, up 11.3 percent from a year ago, according to information on Friday. Sales Manager Pieter Nota spoke of the strong development of overall sales, especially of pure electric vehicles. The Munich company sold 88,289 electric vehicles, more than double the previous year’s sales. All major regions saw significant growth in all-electric models.
Delivery figures for Airbus, the world’s largest aircraft maker, continue to develop positively. DAX Group announced that it delivered 72 machines in June. That’s more than any other month so far this year. Airbus delivered 316 aircraft in the first six months. To meet the 2023 target of 720 aircraft, second-half deliveries must remain at around June levels.
L Catterton, Birkenstock’s majority shareholder investment firm, is examining strategic options for the footwear maker, according to media reports. The possibility also includes an initial public offering, the agency said, citing people familiar with the matter. Birkenstock could be valued at $6 billion on US trading floors this year or next. Birkenstock was sold to L Catterton and billionaire Bernard Arnault in 2021. The traditional company from Linz am Rhein is said to be valued at around 4 billion euros. Behind L Catterton is the French luxury group LVMH and so on.
For the quarter, Levi Strauss posted a net loss of $1.6 million, compared with a profit of $49.7 million a year earlier. Levi Strauss returned to the stock market in 2019 after an absence of more than 30 years. The company lowered its full-year forecast.