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DAX cannot hold profits

The DAX defied the Russian gas delivery freeze and rising interest rate concerns for a long time today and was surprisingly robust. With the daily high at 12,927 points so far, the 13,000 point mark has even moved back within reach.

However, the leading German index is currently falling again. Because Wall Street can't maintain its premarket gains and is now turned negative.

Subdued US opening

After the long weekend, the New York stock exchanges are trading again today. The major stock indices initially opened cautiously after things had looked even better in pre-market trading. The leading index Dow Jones is currently losing a good 0.3 percent, the technology exchange Nasdaq around one percent. In the past week, the most well-known Wall Street index had recorded a minus of almost three percent.

Similar to this country, experts remain cautious when looking at the indirect market prospects. Despite the friendly start, the year is unlikely to be easy for investors, predicts Morgan Stanley analyst Michael J. Wilson. He dropped his forecast for earnings per share because the weak economy was affecting the stock market. He also expects a decline of three percent in 2023 – even if there is no recession.

A little relaxation on the gas

The German market is being supported by the somewhat easing fear of gas bottlenecks in winter. Despite the lack of Russian deliveries through the "Nord Stream 1" pipeline, the European natural gas future fell by ten percent to 222 euros per megawatt hour. However, it remains at a high level after Russia's delivery stop recently pushed prices back up sharply.

Thanks to acquisitions from other providers and planned savings, no acute bottlenecks are to be expected, the analysts at the rating agency Fitch predicted. According to the industry service Gas Infrastructure Europe, the European gas camps are currently 82 percent full. In Germany, the rate is 86 percent. A filling level of 80 percent was targeted in November.

The war of nerves continues

According to Gazprom's Deputy CEO, the company will only resume deliveries to Germany after Siemens Energy has repaired the faulty plant. Russia also refers to the sanctions that blocked this.

Siemens Energy rejects this. "We cannot understand this new representation based on the information made available to us over the weekend," said the manufacturer. "Therefore, our assessment that the findings communicated to us does not constitute a technical reason for the cessation of operations applies for the time being."

All eyes on the ECB

In view of the gas crisis, what is normally the most important topic for the stock exchanges is currently almost taking a back seat. Because on Thursday, another rate hike by the ECB by at least 50 basis points is a foregone conclusion. Many market participants also consider a large step of 75 basis points realistic in the fight against the high inflation of currently almost 8.0 percent.

Expectations for the meeting are likely to be high after numerous Council members have recently made significant efforts to convince the market of their determination to contain inflation. Interest rate increases by the central banks are intended to catch the rapid inflation, but stockbrokers fear that the economy will slow down. However, persistently high inflation would be even more damaging.

"In view of escalating inflation expectations, the interest rate fantasies of the market have recently increased significantly," report the analysts at Deutsche Bank, for example. There was even some talk of a possible interest rate hike of one percentage point. “However, a rate hike of no more than 0.75 percentage points seems most likely.”

Production orders from industry are falling sharply

In July, German industry received fewer orders for the sixth month in a row due to numerous problems relating to the weakening global economy, the lack of materials and rising prices. The month-on-month decline of 1.1 percent was stronger than expected, according to data from the Federal Statistical Office. "In connection with the persistently high energy prices, there is increasing fear that companies could be forced to further limit their production due to rationing of gas and electricity in the coming months," stated Jochen Stanzl, market analyst at brokerage house CMC Markets.

The service sector in Germany, on the other hand, was able to increase its sales significantly in June. Driven by a recovery from the corona pandemic, sales rose by almost ten percent on a price-adjusted basis compared to the same month last year, as reported by the Federal Statistical Office. In addition, the 9-euro ticket had an effect. Nominally, sales in the service sector grew by a good 14 percent. Nevertheless, neither the federal government nor the economy expect a change for the better in the near future. On the contrary: According to economists, Europe's largest economy is heading for a recession.

The euro remains ailing

The euro, which was still quite robust in the morning, has meanwhile fallen back again. At midday, the common currency was still around $0.9940, a little more than the day before, currently $0.9880 is being paid.

At the beginning of the week, the euro had fallen to its lowest level in almost 20 years at $0.9878. The European Central Bank (ECB) set the reference rate at $0.9920 yesterday. The ISM sentiment index for services in August is expected from the USA in the afternoon.

Oil prices in reverse again

The first reduction in production by the major oil-exporting countries since 2020 quickly fizzled out on the market. After two days of gains, oil prices eased again today.

"The OPEC+ news is now in the market and the focus has temporarily shifted to economic and inflationary concerns," said Tamas Varga of oil brokerage PVM. Prolonged corona restrictions in China renewed fears that high inflation and rising interest rates will dampen demand for crude oil.

The price of Brent from the North Sea fell by more than three percent to as much as $92.62 a barrel. Resurgence fears had pushed the price more than 20 percent at times in the previous three months, after it had climbed to an all-time high of $147 following Russia's invasion of Ukraine in the spring.

Does Uniper need further state aid?

The papers of the ailing gas importer Uniper marked another record low at EUR 4.70 today, after temporarily stabilizing with an increase of almost three percent. Investors are currently speculating when the ailing group will need further state aid.

Uniper shares fell to a record low yesterday after Russia failed to resume gas supplies through the Nord Stream 1 pipeline. Uniper now has to buy even more expensive gas on the market in order to be able to meet its delivery obligations.

Volkswagen asked for green light for Porsche IPO plans

The prospect of the IPO of the sports car subsidiary Porsche AG at the end of September makes investors grab shares of Volkswagen. VW titles rose by around 2.8 percent in the afternoon. The titles were among the big winners in the DAX. The shares of the major shareholder of the Wolfsburg car group, the family holding company Porsche SE, also increased at times. Yesterday evening, Volkswagen gave the go-ahead for the IPO of the sports car subsidiary Porsche.

Volkswagen named the end of September or the beginning of October as the time for the share placement, but made this subject to further developments on the capital market. If necessary, they want to take their time until the end of the year. The Volkswagen works council also supports the concrete timetable for an IPO for the subsidiary Porsche. Because the expected income should not least flow into the further conversion towards e-mobility and digitization, the step contributes to the future viability of the locations, according to the employee representation in Wolfsburg today.

Lufthansa pilots' strike is called off

Lufthansa shares rise in the MDAX after the pilots and the company have agreed on the wage conflict. A strike is off the table. "The announced industrial action for this week will be canceled," said the pilots' union Vereinigung Cockpit (VC) after the hearing on Tuesday.

A comprehensive package has been agreed and is waiting to be finalized in the coming days. Important first steps towards sustainable cooperation had been taken. Lufthansa could not initially be reached for comment

Siemens Energy is promoted back to the first stock exchange league

In the middle of the energy crisis, the energy technology group Siemens Energy is returning to the first German stock exchange league. The company, which only had to leave the DAX six months ago, will replace the grocery delivery service HelloFresh in two weeks – on September 19 – as announced by Deutsche Börse yesterday evening after the regular review of the index composition.

HelloFresh shares, which had benefited massively from the corona pandemic with closed restaurants and home offices, have fallen by almost two-thirds this year. The start-up company is still worth a good four billion euros on the stock exchange. Nevertheless, after the confirmed buy recommendation by the private bank Berenberg, the shares were among the DAX favorites with a plus of more than four percent.

Four changes in the MDAX: Uniper is relegated

There will also be changes in the other indices in the near future: As expected, Uniper will be relegated from the MDAX small-cap index. The gas importer has encountered great turbulence as a result of the sluggish natural gas supplies from Russia and the market turmoil. The real estate group Grand City Properties and the IT service provider Cancom also slipped from the MDAX to the small-cap index SDAX. The recently merged German-American network specialist Adtran Holdings, the auto parts supplier Hella, which is majority-owned by the French Forvia, and the spring specialist Stabilus are stepping up.

In addition, four companies are falling out of the SDAX, above all the ailing real estate investor Adler Group and – each after takeovers by financial investors – the real estate financier Aareal Bank and the shopping center investor Deutsche Euroshop as well as the office equipment mail order company Takkt from Stuttgart. Also new to the index are the wind turbine builder Nordex, the wind and solar park developer Energiekontor and the bioethanol producer CropEnergies, which belongs to the Südzucker Group. The graphite and carbon specialist SGL Group is also back in the SDAX.

Swiss energy supplier Axpo gets a billion-dollar credit line

The Swiss energy supplier Axpo receives a billion-dollar credit line from the state as protection against serious difficulties. The government announced today in Bern that the company could access up to four billion francs (4.1 billion euros). Axpo is a system-critical electricity company for Switzerland. The group justified its application with the fact that wholesale prices on the electricity exchanges have increased tenfold compared to September 2021 and price fluctuations have reached records in the past few days. Axpo was the first energy company to claim the rescue package, but has not yet activated the credit line.

Fortum secures financial cushion for energy crisis

The Finnish utility and Uniper's main shareholder Fortum has also procured an additional financial buffer to deal with the energy crisis. Fortum announced today that the group had agreed bridge financing of EUR 2.35 billion with the state investment company Solidium. "The ongoing energy crisis in Europe is caused by Russia's decision to use energy as a weapon and is now also hitting Fortum and other Nordic electricity producers hard," said CEO Markus Rauramo.

Ireland fines Instagram €405m

Instagram is set to pay a record €405m fine in Ireland. It is about the handling of data from children and young people, said the Irish data protection authority. Underage users between the ages of 13 and 17 were allowed to operate business accounts on the photo and video platform, which would have allowed their telephone number and/or email address to be published. Instagram is part of the Meta Platforms group, which also owns the Internet platform Facebook and the messenger service WhatsApp.

CVS buys Signify Health for $8 billion

US drugstore chain CVS Health Corp is acquiring healthcare company Signify Health for $8 billion. The group, which is particularly well-known for its pharmacies, will thus gain access to a network of 10,000 doctors who will take care of the needs of patients at home in particular. The deal is expected to close in the first half of 2023. Signify will continue to be managed as a division by the previous boss Kyle Armbrester. According to media reports, other companies such as Amazon and UnitedHealth Group had also shown interest in Signify.

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