Market report: Wall Street is holding up well

Weak economic data clouded the day, but that’s only one side of the coin. The hope that the central banks would give in supported the courses – if not those of the tech stocks.

Weak export data from China in the middle of the week revived the ongoing economic concerns around the world. In the current situation, however, the stock markets do not take such data as negatively as one might think. Because with the upcoming interest rate decisions by the central banks in the USA and the euro zone, monetary policy will come to the fore again. The latest gloomy economic data are fueling hopes that the monetary watchdogs will soon loosen up the reins.

The standard values ​​​​on Wall Street turned positive in late business. The Dow Jones closed 0.27 percent higher.

On the other hand, profit-taking began on the Nasdaq technology exchange after a friendly start. The Nasdaq 100 index ended trading 1.75 percent lower. The tech giants in particular, which had recently benefited from the imagination surrounding the topic of artificial intelligence, such as Amazon, Alphabet and Microsoft, were on the sales lists.

The interest rate decision of the Federal Reserve is due on Wednesday next week and the day after that of the European Central Bank. According to experts, the Governing Council of the ECB will decide on the eighth interest rate hike in a row, while the US central bank is likely to take an interest rate pause. According to ECB Director Isabel Schnabel, the ECB still has to raise interest rates. Since there is great uncertainty about the duration of the inflation wave, it is better to do too much than too little when weighing up the interests, she told the Belgian newspaper De Tijd. “We still have more to do.”

The DAX exceeded the 16,000 point mark several times in the afternoon, but a lack of willingness to buy caused it to close 40 points below it. In the morning it had looked even bleaker with a daily low of 15,909 points.

Disappointing economic data from China and Germany initially depressed prices. But investors couldn’t bring themselves to take profits on a larger scale. “The German share index is in a deep sleep phase. The volatility continues to decrease. At the 16,000 mark there is almost nothing going in either direction,” stated Jürgen Molnar, capital market strategist at broker RoboMarkets.

In May, China’s exports fell surprisingly sharply by 7.5 percent – experts see this as a sign of how much the global economy is currently weakening. Also the German industrial groups caused a disappointment, they only produced 0.3 percent more in April than in the previous month. Economists had expected an increase of 0.6 percent here.

Weak industry and interest rate hikes in recent months are likely to have a significant impact on economic output in the second half of the year. The OECD does not expect the German economy to grow this year, but only again in 2024. The Hamburg Institute for the World Economy (HWWI) even expects a decline in economic output of 0.5 percent this year.

The Turkish lira has fallen more than it has in two years. The euro reached a record level of 24.99 lira per euro. Market observers suspect that the Turkish central bank has reduced its interventions to artificially stabilize the domestic currency after President Erdogan was re-elected. Because of the lira sell-off, Commerzbank analyst Ulrich Leuchtmann expects the central bank to raise interest rates soon. This could stop the fall in prices, at least in the short term.

After initial losses, the euro turned positive. Late in the evening, the European common currency is trading at $1.0702. The ECB set the reference rate at $1.0683 yesterday afternoon. An ounce of gold traded at $1942.

After the significant surcharges at the start of the week, oil prices continued to rise in the middle of the week. The weekly inventory data from the US supported the listings. Stocks of crude oil fell by 0.5 million to 459.2 million barrels (159 liters) last week. Analysts had expected an increase of 1.5 million barrels. In the evening, a barrel of North Sea Brent for delivery in August cost $77.17. That’s one percent more than yesterday.

One of the winners in the DAX was the E.ON share. The President of the Federal Network Agency, Klaus Müller, wants to grant network operators higher returns on their investments. The interest on equity for this will increase from 5.07 to 7.09 percent in 2024, Müller told the “Handelsblatt”. Analyst Alberto Gandolfi of Goldman Sachs commented on this prospect with “big positive”. He calculated an additional pre-tax profit of around 150 million euros for E.ON by 2027.

There was also positive news for the German car manufacturers VW, BMW and Mercedes-Benz: The ramp-up in the Chinese car market accelerated further in May despite the general economic downturn. 1.76 million vehicles were delivered to retailers, according to the PCA (Passenger Car Association) based on preliminary data. This corresponds to an increase of 30 percent compared to the same period last year.

Fielmann ventures into the USA with two takeovers. The optician chain is buying the US optician SVS Vision with more than 80 shops and the Canadian company Eyevious Style with its online platform Befitting. SVS is valued at the equivalent of around 105 million euros, Eyevious at around 35 million euros – each without cash and debt. While the Eyevious takeover is to be completed immediately, the SDAX company intends to have the purchase of SVS Vision sealed by August 31st.

Rheinmetall plans to deliver more tanks and anti-aircraft ammunition to Ukraine this summer. The armaments company has received an order from the Federal Ministry of Defense for 20 “Marder” armored personnel carriers. How much the tanks cost remains vague. We are talking about a mid-double-digit million euro amount.

MorphoSys shares continued to soar. Since the beginning of the year, the antibody specialist’s paper has gained around 120 percent and most recently reached its highest level since the beginning of 2022. A week ago, UBS analyst Xian Deng recommended buying the biotech stock with a price target of EUR 47. However, the TecDAX title was correct only this Monday after successfully bottoming out above the highs of the past few months.

The laboratory outfitter Stratec is expanding its US business through a takeover. The SDAX company is acquiring Natech Plastics, a supplier with customers in medical technology, in-vitro diagnostics, life sciences and consumer goods, for 30 million dollars. From 2024, a “neutral to slightly positive effect” can be expected from the takeover, it said.

One of the biggest winners in the Eurozone’s leading index, the EuroStoxx 50, was the Inditex share. The Zara parent company can continue to defy the general slump in consumption. Sales and operating profit rose sharply in the first fiscal quarter through the end of April. The new summer collections are said to be well received by customers, so business has been good in the past few weeks. Analysts were impressed.

The Austrian steel group Voestalpine achieved record sales and operating results in the past 2022/23 financial year (as of the end of March). The bottom line, however, fell by 11.4 percent to 1.2 billion euros. Nevertheless, the shareholders are to receive a dividend of EUR 1.50 per share, which is 30 cents higher.

Boeing has identified a new defect in its 787 Dreamliner long-haul jet plagued by a series of production breakdowns. The US aircraft manufacturer is currently examining a number of machines that have not yet been handed over to customers, which could require rework before delivery. According to the current state of knowledge, however, the problem is not acutely relevant to safety and should initially not change anything in the delivery target for the year as a whole.

The US Securities and Exchange Commission has sued Coinbase, another major trading platform for digital currencies such as Bitcoin. Coinbase has offered for trading crypto assets that the SEC classifies as securities and which should have been registered by the company as such, according to the lawsuit filed in court in New York yesterday. Coinbase operates an illegal US securities trading exchange while also performing certain other financial services without the necessary licenses.