market report
Status: 06/10/2022 12:47 p.m
The DAX has increased its losses and slipped below the 14,000 point mark. How the week will end in the DAX now depends on the upcoming inflation data from the USA.
The DAX came under more pressure in the course of the morning. In the low it went down to 1.7 percent to 13,957 points. With the slip below the important mark of 14,000 points, the technical picture in the leading German index has become even more gloomy. The next key stop that could halt the seller rush is now at 13,850.
DAX investors reduce their risks
It’s the announced yesterday, surprisingly tight interest rate schedule of the European Central Bank (ECB), which fuels the fear of DAX investors of a significant economic slowdown. ECB President Christine Lagarde yesterday announced a key interest rate hike of 0.25 percentage points for July and signaled a series of further hikes in order to contain inflation.
“For investors, the faster turnaround in interest rates in the euro zone is another argument to reassess risks on the stock market and, above all, in comparison to the rising yields on the bond market,” emphasizes Jürgen Molnar, capital market strategist at RoboMarkets.
Rising yields make stocks less attractive
Yields on euro government bonds rose sharply yesterday. Today, yields on many southern European bonds are continuing to rise. For example, the yield on ten-year Italian bonds climbed to 3.774 percent, the highest level since October 2018.
The risk premium (spread) to the German counterparts marks the highest level for more than two years. At the end of the week, the ten-year federal bond remained close to its eight-year high of 1.47 percent, which was marked yesterday. Rising bond yields make stocks less attractive compared to bonds.
Relief rally or escape from risk?
How the week will end on the German stock market now depends primarily on the publication of the US inflation data for May at 2:30 p.m. According to expert Jeffrey Halley from broker Oanda, it is difficult to predict how the markets will react to this.
At a number of 8.4 percent or higher, he expects a flight from risk across all asset classes. If inflation is “only” at a maximum of 8.2 percent, a relief rally could set in because interest rate expectations of the Fed would then drop, according to Halley.
Dow futures down ahead of inflation data
The US investment bank JPMorgan had already announced a stronger increase in the inflation rate yesterday. This assessment was later corroborated by a Fox News White House source. This caused prices on Wall Street to fall significantly in late trading.
“It is to be hoped that the rumors about today’s inflation data from the USA are not true. For the moment, the stock market simply cannot free itself from the stranglehold of the inflation specter,” says Jochen Stanzl, chief analyst at CMC Markets. In the run-up to the important data release, the future on the US leading index Dow Jones Industrial is around 0.3 percent lower.
euros under 1.06 dollars
After an early countermovement, the euro has picked up where it slid yesterday. The European common currency falls to the hour by 0.2 percent to 1.0597 dollars. Yesterday, a euro was worth 1.771 dollars at the high. A troy ounce of gold cost $1,842 at lunchtime, down 0.3 percent from the previous day.
Oil prices: Brent continues to rise
Oil prices continue to rise. A barrel (159 liters) of Brent is trading 0.3 percent higher at $123.91 at midday. The North Sea variety is thus back on course for its April high.
The situation on the oil market remains tense given the significant excess demand. The oil cartel OPEC+, to which Russia belongs, has been struggling for a long time to meet its self-imposed production targets for a number of reasons.
Real estate shares suffer from interest rate turnaround
In the overall weak market environment, real estate values are under particular pressure at the end of the week. Vonovia lost particularly clearly in the DAX with over four percent. Deutsche Wohnen and TAG Immobilien slipped by around five percent in the MDAX and Instone, including the dividend deduction, even fell by double digits in the SDAX.
Fear of flight chaos in summer weighs on airline stocks
Concerns about air traffic disruptions during the holiday season are weighing on European flight numbers. Wizz Air, Lufthansa, Easyjet, Ryanair and the British Airways parent IAG are falling significantly. A lack of staff and bottlenecks at security controls, check-in and aircraft handling will result in numerous flight cancellations in the coming weeks.
Covestro extends CEO Steilemann’s contract
The plastics group Covestro has extended the contract with its boss Markus Steilemann. Steilemann will remain CEO of the DAX group for another five years, the contract now runs until the end of May 2028, it was said today from Leverkusen. “Markus Steilemann has managed Covestro excellently during his term as CEO, set important strategic directions and promoted the sustainable growth of the group,” said Richard Pott, Chairman of the Supervisory Board.
Another glyphosate success for Bayer in the USA
The DAX group Bayer has won another lawsuit in the USA about alleged cancer risks from the weed killer glyphosate. A jury in a Kansas City, Missouri court yesterday ruled in favor of Bayer, ruling that the herbicide was not responsible for plaintiff Allan Shelton’s illness.
Thyssenkrupp subsidiary buys shipyard in Wismar
After the insolvency of the MV Werften Group, a new start is on the horizon for the Wismar shipyard. A buyer has been found in the Kiel armaments company Thyssenkrupp Marine Systems (TKMS). Instead of freighters and cruise ships, submarines for the navy are to be built in Wismar in the future.
GSK makes progress on pneumonia vaccine
The pharmaceutical company GlaxoSmithKline wants to register its vaccine against pneumonia with the authorities this year for approval. The latest GSK study is the first to show statistically significant efficacy against respiratory syncytial virus (RSV) in adults 60 and older, GSK said. If approved, the vaccine is expected to bring in billions for GSK.
Nestlé is once again shipping tons of baby milk powder to the USA
The Swiss food company Nestlé is again selling 28,200 cans of baby milk powder to the USA. The US Food and Drug Administration (FDA) announced yesterday that the more than 22 tons of goods would be sourced from Nestlé Germany. The US Department of Health and Human Services is currently examining ways to bring the products to the US as soon as possible.
US investigators take a closer look at Tesla’s “autopilot”.
The US Department of Transportation has theirs Investigation of Tesla’s “Autopilot” driver assistance system expanded after a series of rear-end collisions. Since the investigation began in August, she has identified six other incidents in which Teslas with the “Autopilot” system turned on crashed into emergency vehicles parked on the side of the road. Originally, there were eleven such accidents.
SEC launches investigation into Ericsson
The Swedish network supplier Ericsson has been targeted by the US Securities and Exchange Commission. The agency has launched an investigation into Ericsson for possible bribery payments in Iraq, the company said. Ericsson fully cooperates with the stock exchange supervisory authority. It is too early to predict the outcome of the test.
Refinery accident causes kerosene bottlenecks at Vienna Airport
The accident in the OMV refinery in Schwechat now also has an impact on the kerosene supply at Vienna Airport. Due to the damage to the main distillation plant, there are now bottlenecks in kerosene, and Vienna Airport has been informed of this, a company spokesman said. However, there are no effects on flight operations.