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Global Economy

Turbulent week ends with a glimmer of hope

It sounds paradoxical, almost cynical: Russian troops are penetrating further and further into Ukraine with tanks and are bombing the capital Kiev with planes. Several people were injured or killed. And the stock exchanges are reacting with strong price gains after they crashed yesterday. How does that fit together?

Hopes for peace on the stock exchanges

The answer is relatively simple: the future is traded on the stock markets. And this doesn't look quite so bleak. Because there is now hope that the end of the war is near. According to a media report, the Russian government has signaled its readiness for possible peace negotiations. Moscow is ready to send a Russian delegation to the Belarusian capital of Minsk for talks, said Kremlin spokesman Dmitry Peskov.

Wall Street on the up

DAX almost back to pre-Ukraine war level

Moscow stock exchange makes up part of price slide

The price recovery on the Russian stock exchange was the strongest today. Moscow's leading index RTS posted a record price jump of 26 percent at the end of the week, largely making up for its recent losses. An interruption to Europe's supply of Russian oil and gas is currently unlikely, said Brian Horrigan, chief economist at wealth manager Loomis Sayles. However, that cannot be completely ruled out. Russian President Vladimir Putin could turn off the tap at any time in retaliation or if the war went unfavorably for him.

Consequences for the global economy less than feared

So far, the effects of the war and the Russian sanctions on the global economy appear to be less severe than feared. The waiver of sanctions on Russian oil and gas supplies and the country's exclusion from the Swift payments network also provided some relief from an investor perspective, said Neil Wilson, chief analyst at online broker Markets.com.

Political stock exchanges have short legs, is a well-known saying among investors. In other words, bad political events usually only have a limited negative impact on stock market prices. Geopolitical crises are quickly overcome.

Will the turnaround in interest rates come later?

In addition, the military conflict in Ukraine could delay the tightening of monetary policy by the central banks. "Fear of ongoing geopolitical tensions fuels hopes that the Fed may postpone a last-minute rate hike," said Emden Research analyst Timo Emden. The European Central Bank (ECB) is also likely to put its interest rate fantasies on hold for the time being.

uncertainty persists

However, market observers have mixed feelings about investors' increasing willingness to take risks. "Uncertainty about the developments in the Ukraine conflict, the further extent of sanctions and their impact on the economy will keep the markets in suspense for longer," believes Robert Greil, Chief Strategist at Merck Finck.

Relaxation on the raw materials front

Some investors cashed in on other commodities, of which Russia is also one of the top exporters. The industrial metals aluminum and tin fell by up to two percent. The European wheat future fell by more than 3.5 percent, but remained close to its recent record high at EUR 305 per ton.

Ifo Institute considers five percent inflation possible

The Germans have to be prepared for further price increases: According to a survey by the Munich ifo Institute, more companies than ever before want to raise their prices in the next three months. The barometer determined in the process climbed to a maximum of 47.1 points. "With the Russian invasion of Ukraine, the cost of gas and oil threatens to rise further, and with it many other prices for consumers," said Timo Wollmershäuser, head of ifo economic forecasts. "A five before the decimal point of the inflation rate in 2022 as a whole is just more likely than a three."

Euro again above 1.12 dollars

provider asked

Billions in profit for BASF

VW pushes Porsche IPO

Porsche SE, through which the Porsche and Piech families hold a majority stake in Volkswagen, will subscribe to 25 percent plus one share of the ordinary shares. The holding company is to purchase the shares at the price of preferred shares plus a premium of 7.5 percent. The Emirate of Qatar, which holds a 14.6 percent stake in VW, also wants to acquire a stake in the preferred shares of Porsche AG. The ordinary shares with voting rights are not to be listed on the stock exchange.

The management of the Wolfsburg carmaker had previously cleared the way for the subsidiary to partially enter the trading floor. It's about Porsche AG, in which the operative business of the Stuttgart sports and off-road vehicle manufacturer is bundled. The company is a key profit generator of the Volkswagen Group. According to the current planning status, half of Porsche's share capital is to be split into ordinary and preference shares. Up to a quarter of the preferred securities could then be traded publicly – based on the total amount of all shares, that would be a maximum of 12.5 percent.

Expensive winter storms cost insurers 1.4 billion euros

According to the industry association GDV, the series of three winter storms costs insurers in Germany around 1.4 billion euros. The general manager of the General Association of the German Insurance Industry (GDV), Jörg Asmussen, made an initial assessment of the damage in Berlin. "Three heavy hurricane-like storms in such a short time have so far been rather rare in Germany," he said. However, insurers covered most of the damage. Well over 90 percent of homeowners are insured against storm damage. The storms "Ylenia", "Zeynep" and "Antonia" swept across Germany over the past weekend with wind speeds of up to 160 kilometers per hour and caused major damage, especially in the north.

Swiss Re is making a profit again

The reinsurer Swiss Re returned to profitability in 2021 and, despite severe storms and other corona costs, made a profit in the billions. However, the figures had disappointed market expectations, which was mainly due to the Covid 19 losses in life reinsurance. In addition, Swiss Re had to pay more than two billion dollars for damage caused by natural disasters such as Hurricane "Ida" in the USA and the devastating floods in Europe in July. As in the previous year, shareholders are to receive a dividend of CHF 5.90 per share. In 2020, Swiss Re suffered a net loss of $878 million.

Run on cybersecurity stocks

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