market report
Status: 04.10.2022 09:50 a.m
After the British, the Australian central bank has now also deviated from its tight rate hike course. This fuels hopes on the stock markets, the DAX makes a leap upwards.
The DAX started the trading day with a strong premium. At the start of XETRA, it rose 1.2 percent to 12,360 points. In the first few minutes of trading, it continues to rise above the 12,400 point mark. The stock market is also boosted by news from Australia. The Reserve Bank of Australia (RBA) surprised markets this morning with a surprisingly small 25 basis point rate hike.
“The key interest rate has been raised significantly in a short period of time,” said Central Bank Chairman Philip Lowe. Now they want to take the time to analyze the prospects for inflation and economic growth in Australia.
More money for share purchases again?
Some market participants take this as a sign that the global central banks could deviate from their strict course of interest rate hikes in view of increasing signs of economic weakness. According to analysts at the CME Group, the likelihood of another major interest rate hike of 75 basis points by the US Federal Reserve (Fed) at its next meeting on November 2 has also decreased significantly in recent weeks.
“For the stock markets, the indications of a collapse in monetary policy mean that in the end more liquidity than expected will remain in circulation,” explains Jochen Stanzl, chief analyst at broker CMC Markets. That in turn would also mean more money for stock purchases, which would make the stock more attractive relative to bonds. The British central bank had already fired investors’ imaginations with the announcement of a bond purchase program last week.
U-turn in the DAX raises hopes
With its early price gains, the DAX meanwhile seamlessly continued its good performance the day before. After initial losses that brought it dangerously close to its low for the year, the DAX turned positive yesterday and was ultimately able to make up 0.8 percent to 12,209 points.
This reversal bodes well from a technical perspective, as does the recapture of the all-important 12,200-point mark. In the previous week, the DAX had fallen to 11,862 points, its lowest level since November 2020. At the “oversold” level, many stock market traders had pointed to an imminent stabilization.
British turnaround boosts markets
Tailwind for the markets also comes from Great Britain. To heavy criticism the British finance minister has announced a reversal of the planned tax cut. Kwasi Kwarteng declared yesterday that he did not want to lower the top tax rate of 45 percent for top earners after all.
Investors took this as a signal “that the UK government is at least partially ready to back down from the intentions that have unsettled markets over the past week,” said John Briggs, head of economics and market strategy at NatWest Markets.
Dow Jones and Nasdaq on course for recovery
Wall Street guidance is also positive. The US stock exchanges had started the week on a recovery course. The leading index Dow Jones closed yesterday 2.7 percent higher at 29,490 points.
The S&P 500 advanced 2.6 percent to 3,678 points. The tech-heavy Nasdaq improved 2.3 percent to 10,815 jobs. The market barometers thus made up for some of their recent price losses. Wall Street could continue to climb today. The Dow future is trading 1.0 percent higher at the hour.
Nikkei on course for recovery
In the slipstream of Wall Street’s recovery, Asian stock markets also rose in the morning. The Japanese Nikkei index rose by three percent to 26,976 points, the South Korean Kospi rose by 2.6 percent to 2,210 points. The Chinese stock exchanges were closed for the holiday.
Euro continues to recover well
In early forex trading, the euro is up 0.3 percent at $0.9866, gaining further ground. At the end of September, the European common currency slipped to $0.9538, its lowest level in 20 years. A troy ounce of gold costs 1703 dollars in the morning.
Oil prices can hold gains
Oil prices are able to defend their strong premiums from the previous day. In early trading, a barrel (159 liters) of North Sea Brent cost $89.28. That was 42 cents more than yesterday. The price of a barrel of US West Texas Intermediate (WTI) grade rose 24 cents to $83.87.
According to insiders, OPEC+ is considering cutting production by a million barrels a day. It would be the biggest cut since the outbreak of the coronavirus pandemic in early 2020. The organization from a good 20 countries is meeting in Vienna tomorrow to discuss its production policy.
VW, Porsche and BMW with increased sales in the USA
On the German stock market in the morning, the focus is on car values. The German industry giant VW increased its US sales in the three months to the end of September compared to the same period last year by 12.0 percent to 88,820 new vehicles. The main reason was strong SUV business with the Atlas, Tiguan and Taos models.
Volkswagen’s sports car subsidiary Porsche claims to have increased US sales in the third quarter by 8.5 percent to 16,581 cars. The German luxury car manufacturer BMW also increased its sales in the important US market and delivered 78,031 new cars of its regular brand there; it increased sales by 3.2 percent year-on-year.
RWE remains in a buying mood
The utility RWE wants to continue investing in renewable energies in Germany and Europe, even after a multi-billion dollar takeover in the USA. RWE boss Markus Krebber made it clear that the group does not want to cut back on its spending in Germany and Europe. The Energy Giant acquires US solar system developer and operator Con Edison Clean Energy Businesses for $6.8 billion.
Millions in support approved for BASF
Germany may support the chemical group BASF with 134 million euros. The EU competition authorities have given the green light for the multi-million dollar funding, as the EU Commission announced yesterday in Brussels. The production of renewable hydrogen, for example for transport, is to be supported. So-called green hydrogen is CO2-free because it is produced using electricity from renewable energy sources.
Surprising change of boss at ProSiebenSat.1
There is a surprising change of boss at the ProSiebenSat.1 television group. Former RTL boss Bert Habets will take over as CEO of the Bavarian television group on November 1st. The native Dutchman has been a member of the ProSiebenSat.1 Supervisory Board since May 2022. The previous boss Rainer Beaujean had resigned his office by mutual agreement with the supervisory board, it was said.
Credit Suisse: Price recovery after record low
Credit Suisse shares recovered in the morning with a price increase of around five percent. Yesterday, investor confidence in the crisis-ridden bank continued to erode, with shares in Switzerland’s second-largest bank temporarily falling by more than eleven percent to a record low of CHF 3.52.
Rivian shares asked for numbers
Shares in electric car maker Rivian Automotive are up 9 percent in after-hours trading. The company is sticking to its full-year production target of 25,000 vehicles. In the third quarter, Rivian produced 7363 vehicles and delivered 6584 vehicles. In the previous quarter, the company manufactured 4,401 vehicles and delivered 4,467 to customers.