After a new high for the year: DAX profits are still crumbling

BASF with slump in sales, but above expectations

Among the individual values ​​in the DAX, the Ludwigshafen chemical giant BASF presented figures for the first quarter in the afternoon. Despite a slump in operating profits, the company performed significantly better than analysts had expected.

Earnings before interest, taxes and special items (EBIT) fell by almost a third to 1.93 (2022: 2.82) billion euros, BASF announced in the afternoon. Analysts surveyed by the company had only expected an average of 1.6 billion. Above all, the agricultural business turned out to be significantly better than expected, whereas the food division performed weaker than expected.

Sales fell by 13 percent to 19.99 billion euros, well below analyst forecasts. The bottom line is that profits jumped by 28 percent to 1.56 billion euros, as BASF explained on the basis of preliminary figures. A year ago, write-downs on the stake in the oil and gas producer Wintershall Dea in the wake of the Ukraine war weighed on earnings. The share fluctuated according to the numbers before finally turning positive and closing 0.64 percent higher at EUR 49.42.

Merck shares collapse

By far the biggest loser in the DAX was the Merck KGaA share with a minus of over seven percent. The Darmstadt-based Parma and technology company has to accept a setback in the decisive clinical study (phase III) with its multiple sclerosis drug evobrutinib. The US Food and Drug Administration (FDA) has ordered a partial suspension of the clinical trial of evobrutinib, Merck said. The reason is the suspicion of liver damage from the drug.

Wall Street is falling behind again

On Wall Street, investors continue to react very cautiously to the eagerly awaited price data from March. The major share indices initially rose at the opening, but were unable to maintain their advances. The initial euphoria following the price data quickly dissipated.

The leading index Dow Jones is still moderately up at 33,760 points, the daily high was 33,894 points. The market-wide S&P 500 index is currently struggling with its closing price, as is the technology exchange Nasdaq, which had suffered even more yesterday from interest rate uncertainty.

There are clear gains on the bond market, where yields on ten-year US government bonds fall to 3.41 percent. Investors are thus acknowledging the prospect that the interest rate peak in the country will soon be reached.

However, interest rate cuts are still not in sight, also because the price level is still well above the US Federal Reserve’s (Fed) target path of 2.0 percent. Inflation data is so much in focus because it is so important to the Fed’s monetary policy. Most recently, the financial markets were expecting a key interest rate increase of 0.25 percentage points in May.

Core inflation remains high

A second look at the inflation data shows that the core inflation rate is still at a high level of 5.6 percent, as expected. In February it was still 5.5 percent. Core inflation eliminates volatile energy and food prices. Month-on-month, consumer prices rose 0.1 percent in March. Here 0.2 percent had been expected. Leading Fed bankers have recently pointed out that the core rate still has to fall significantly.

“All in all, the inflation report for March should calm the Fed’s nerves a little,” say Christoph Balz and Bernd Weidensteiner from Commerzbank. “The Fed should therefore now focus its attention more on supporting the positive trend that is emerging. A more aggressive approach is probably no longer necessary in view of the progress. The Fed is approaching its interest rate peak. We expect only two more hikes of 0 each, 25 percentage points,” the experts continued.

Euro at 1.10 dollars – Holzmann advocates further rate hikes

According to US price data, the euro is benefiting from the prospect of the end of the US interest rate cycle, while the dollar’s recent weakness is continuing. In the late afternoon, the European currency traded at a high of exactly 1.1000 dollars, but was unable to hold this level.

The euro is currently rising significantly by around 0.6 percent to $1.0977. The European Central Bank (ECB) set the reference rate at 1.0922 (Tuesday: 1.0905) dollars. In the evening, the market is still awaiting the minutes of the Fed’s last interest rate meeting on March 22nd.

The euro is also supported by the prospect of further interest rate hikes by the ECB. In the view of Austria’s central bank boss Robert Holzmann (ECB), the bank cannot sit back and fight against high inflation, even after six interest rate increases. Given the current situation, another rate hike in May is very likely, said Holzmann in an interview with the “Börsen-Zeitung” published today.

A further increase of 0.5 percentage points cannot be ruled out. “The persistence of inflation currently speaks for another 50 basis points in my view,” he noted. The next ECB rate meeting is May 4th.

Oil prices more expensive again

Oil prices continue to rise. A barrel (159 liters) of North Sea Brent for delivery in June currently costs 1.5 percent more, while US light oil WTI is 1.4 percent more expensive.

Oil prices were supported by a weaker dollar exchange rate after the inflation numbers. A weaker dollar makes crude oil cheaper for investors in other currency areas and thus supports demand. The surprising increase in crude oil inventories in the US last week did not weigh on oil prices in this environment. Oil production increased slightly.

TUI subscription rights under pressure on the last trading day

Trading in the subscription rights from the capital increase of the travel group TUI ended today. The price of the subscription rights fell by more than half to EUR 0.85 by the end of trading at noon – and thus extended its severe loss since trading began at the end of March. For comparison: Tui had originally set the price for the subscription rights at 5.55 euros.

With fresh 1.8 billion euros from investors, Tui wants to repay the rest of the billions in state aid from the Corona crisis and significantly reduce its own debt burden. Group boss Sebastian Ebel would rather put the money from ongoing operations into expanding the holiday business instead of paying interest. But the plans have not yet been appreciated on the stock exchange. Analyst Jamie Rollo from the investment bank Morgan Stanley had advised the previous day to continue avoiding Tui shares. The expert anticipates weak acceptance of the new shares by investors.

Cosco boarding at HHLA is shaky

The controversial entry of the Chinese state-owned company Cosco at a Hamburg container terminal half a year after a fundamental decision by the federal government. The reason is that the Tollerort terminal is now classified as critical infrastructure.

A spokeswoman for Economics Minister Robert Habeck (Greens) said on Wednesday in Berlin that since the conditions had changed, the ministry was now examining the effects on the situation. It is unclear what consequences this could have and whether the deal could still be completely prohibited.

Adler Group gets green light from British court

The ailing real estate group Adler Group can stick to its planned restructuring after a court ruling in London. A spokesman for the Judicial Office confirmed to the German Press Agency that the High Court of England and Wales had given the green light for this plan.

A full written verdict including justification should follow at a later date. First, the “Handelsblatt” had reported. Accordingly, as a result of the decision, Adler is allowed to incur hundreds of millions of euros in new debt and is given more time to repay bonds.

High depreciation at Leoni

The auto supplier Leoni is facing a huge loss as a result of its restructuring. The cable and wiring system specialist is now assuming high three-digit million write-offs for the past year, as it announced today in Nuremberg. So far, there has only been talk of a low to mid three-digit million amount. Because the share capital has been completely used up, Leoni – as already announced – has to convene an extraordinary general meeting, which is planned for June 2nd.

It was already clear that the Leoni shareholders would lose their invested capital. With an expansion course, the group had accumulated billions in debt over the years, which threatened to overwhelm it. The major Austrian shareholder Stefan Pierer (KTM, Husqvarna) wants to absorb Leoni with a capital injection of 150 million euros and at the same time relieve it of its debts by waiving the repayment of almost half of the loans and bonds and instead sharing in future profits. Operationally, Leoni was just in the black with sales of 5.1 billion euros in 2022.

Volvo performs better than expected

According to preliminary figures, the Swedish truck and bus manufacturer Volvo achieved more sales and earnings in the first quarter than experts had expected. The proceeds were 131.4 billion Swedish crowns. Adjusted operating profit was 18.4 billion crowns. Experts had expected less for both indicators.

Parliament rejects financial guarantees for Credit Suisse

The large Swiss chamber of parliament, the National Council, rejected the state guarantee given during the emergency sale of the bank Credit Suisse. The government, the Federal Council, had pledged CHF 109 billion for possible losses. The parliamentary vote has no concrete consequences, but the rejection is a reprimand for the government.

Musk: Twitter workforce down from nearly 8,000 to 1,500

After waves of layoffs under new owner Elon Musk, Twitter has only about 1500 employees after almost 8000 before. Musk gave the figures in an interview with the British broadcaster BBC. It was “painful” to lay off so many people, but without radical austerity measures, Twitter only had “four months to live,” Musk said.