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Global Economy

DAX slips into the red

The progress of the Ukraine conflict is the dominant topic on the stock market at the start of the week. Investors are watching new news from the conflict zone like a rabbit to a snake. The DAX extended its losses at midday after Russia accused Ukraine of shelling a border post. The index is currently struggling with the 15,000 point mark, which has already been fallen below in the meantime.

Previously, the prospect of a summit meeting between US President Joe Biden and Russian head of state Vladimir Putin had given investors confidence and pushed the leading German index to a daily high of 15,192 points. Although there is still hope for a peaceful solution, the situation as a whole remains extremely explosive. The markets react correspondingly nervously. Worries about a Russian invasion of Ukraine had pushed the DAX down by two and a half percent last week.

"The idea of a Ukraine summit with the two presidents Joe Biden and Vladimir Putin provides some relief on the floor," said portfolio manager Thomas Altmann from the investment advisor QC Partners. However, depending on the news situation, the mood could quickly change.

No fixed points from Wall Street

US markets are closed today for a holiday, providing no guidance to European traders. In view of the uncertain situation, US investors had already stopped leaning out the window on Friday. The leading indices had closed lighter.

There was also a lot of nervousness in Asia today. The Tokyo Nikkei index fell 0.78 percent to 26,910 points. In China, the stock market trended sideways, in Hong Kong there were losses.

The economy faces serious consequences

"The Ukraine conflict is hanging like a gray cloud over the stock markets," wrote Ulrich Kater, chief economist at Dekabank. The recent price fluctuations on the financial markets are due to the economic risks of an escalation of the situation. Military action by Russia would result in economic sanctions. You have to say clearly "that sanctions will also hit our own economy hard," said Federal Minister of Economics Robert Habeck to the "Handelsblatt". That is "also clear to our companies".

According to the analyst Andreas Hürkamp from Commerzbank, the leading German index DAX should fall towards 14,000 points if Russia invades Ukraine. Currently, the round mark of 15,000 points still represents good support for the stock market barometer. However, Hürkamp qualified, in the past regionally limited wars have often only had a short-term impact on the stock markets.

Euo is recovering – producer prices are exploding like never before

The euro is increasing on the foreign exchange market and is currently trading below the daily high at $1.1364. Meanwhile, skyrocketing prices at producer level are putting increasing pressure on the ECB to tighten interest rates. An agreement is emerging among the members that the bond purchases under the general purchase program APP could expire in September, the Bloomberg news agency recently reported, citing informed people. This could mean a first rate hike in December.

Meanwhile, German manufacturers raised their prices in December more than ever before because of expensive energy. Producer prices for commercial products rose by an average of 25.0 percent. "This was the strongest increase compared to the same month last year since the survey began in 1949," said the Federal Statistical Office. In December, the value was still 24.2 percent.

The development indicates that consumers will have to brace themselves for persistently high price increases in the coming months. Because the producer prices are considered a precursor for the development of inflation. Oil prices trend mixed at lunchtime

Service providers drive the economy

The German economy grew faster in February than it had in six months due to the recovery of the service providers. The purchasing managers' index for the private sector – industry and service providers together – climbed by 2.4 to 56.2 points, as the IHS Markit institute announced in the morning for its monthly survey of hundreds of companies. This is the best value since August 2021. The barometer is well above the 50 mark, from which it signals growth.

The purchasing manager index for service providers alone rose by 4.4 to 56.6 points, while that for industry fell by 1.3 to 58.5 points. "Despite the weaker production growth in the industry, incoming orders showed the strongest increase in six months," said Smith

Delivery Hero: Sale continues

Among the individual stocks in the DAX, Delivery Hero is again negative and is at the end of the index. The food supplier was particularly disappointed with its latest business figures. Since then, investors have thrown the shares out of the portfolio. Three months ago, the paper still cost around 128 euros, it is currently being traded at just under 46 euros.

In return, the upswing at Deutsche Bank continues, which is still one of the winners. Above all, the prospect of higher interest rates and the associated higher interest margin are currently driving bank stocks. "Rising interest rates trump everything else," Barclays analyst Amit Goel wrote in his latest study, also increasing his previously negative rating for Commerzbank.

Bayer receives approval for kidney drug with blockbuster potential

Bayer is allowed to market its kidney drug Kerendia in Europe. The European Commission gave the go-ahead for the treatment of adult patients with chronic kidney disease in connection with type 2 diabetes, as announced by the Leverkusen-based pharmaceutical and agrochemical group.

Last summer, the FDA approved the drug finerenone under the brand name Kerendia in the USA, and applications for approval are currently being processed by other regulatory authorities around the world. According to Bayer, Kerendia has blockbuster potential, i.e. the prospect of billions in sales.

"Zeynep" costs one billion euros

According to expert estimates, winter storm "Zeynep" costs insurers in Germany around one billion euros. The storm that crossed the Federal Republic on Friday and Saturday was the most intense since Kryill in 2007, said the actuaries (actuaries) of the Cologne consulting firm Meyerthole Siems Kohlruss (MSK) at the weekend. In the course of the week, among other things, DAX member Munich Re will present business figures.

Lufthansa suspends Ukraine flights

In view of the impending escalation in the Ukraine conflict, Lufthansa and the airlines belonging to the group are temporarily canceling the majority of their flights to Ukraine from today. The airlines will initially suspend their regular flights to Kiev and Odessa until the end of February, as the company announced on Saturday on request.

Novavax vaccine is coming to Germany today

The first delivery of the US company's corona vaccine is expected in Germany today. It would be the fifth on the market and an alternative to the mRNA vaccines vaccinated to date. Novavax papers are up almost three percent at noon.

Investor Icahn puts pressure on McDonald's

The US multi-billionaire Carl Icahn, known as an active investor, is urging the US fast-food giant McDonald's to pay more attention to animal welfare when purchasing pork. Icahn nominated two confidants for election to the company's board of directors this year, McDonald's announced over the weekend. Icahn accuses the fast food chain of not meeting the commitments it made in 2012.

The group referred to the measures taken for the animals so far and went on to counterattack: Icahn is the majority shareholder of Viskase, a company that produces packaging for pork and poultry meat. "It's interesting that Mister Icahn hasn't publicly asked Viskase to make similar commitments to McDonald's in 2012."

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