market report
Status: 07/08/2022 10:26 p.m
The US stock exchanges went into the weekend little changed. Things went better on the Frankfurt Stock Exchange, where the DAX passed the 13,000 point mark.
The Dow Jones index of standard values lost 0.2 percent to 31,338 points. The broader S&P 500 fell 0.1 percent to 3,899 points. The composite index of the Nasdaq technology exchange rose 0.1 percent to 11,635 points. Investors had to deal with very positive economic data.
More work than expected
The US economy has in June significantly more jobs created than expected. The Ministry of Labor announced that 372,000 jobs had been added outside of agriculture. On average, analysts had only expected 265,000 new jobs. As expected, the unemployment rate stagnated at 3.6 percent. Wage growth did not slow down as much as the stock market had hoped.
“This means that the second-round effects are higher than feared,” commented Thomas Altmann from QC Partners, with a view to the concern that there will be more price increases in response to previous cost increases. “Wage growth at this persistently high level puts additional pressure on the central bank.” This would make it “difficult if not impossible for the US Federal Reserve to slow down when it comes to tightening monetary policy.”
Investors are now firmly anticipating another major rate hike by the Fed this month. According to the “FedWatch Tool” of the futures exchange CME, the probability of this is 93 percent. This is derived from stock exchange transactions already entered into by market participants on the CME.
Strong price increase in the DAX
At the end of the week, the markets in Europe developed better than in the USA. In Frankfurt, for example, the DAX closed at 13,015 points, up 1.3 percent. On a weekly basis, the increase is one and a half percent.
Euro temporarily below 1.01 US dollars
The continued weakness of the euro provided tailwind for the German stock market, which increases the export opportunities for German companies in international trade. The European common currency temporarily fell to another 20-year low against the US dollar at $1.0072. By the afternoon, the euro had recovered and climbed toward $1.02.
With the downward slide in the past week, the euro has increasingly approached parity with the dollar – i.e. a one-to-one exchange ratio. The last time the euro-dollar exchange rate was at this level was in 2002. That was shortly after the introduction of the euro as cash. Reasons for the weak development are fears of an energy crisis in Europe and the European Central Bank’s relatively restrained fight against high inflation.
Gas crisis remains in the focus of investors
Despite the good price development on Friday, it remains to be seen how long the positive mood will last. The shutdown of the gas pipeline Nord Stream 1 for maintenance is scheduled to begin next Monday and could bring new uncertainty to the market.
“Only after the end of the scheduled maintenance work on July 21 could it be a little clearer whether people and the economy in Germany have to prepare for a hard winter,” warns Jürgen Molnar, capital market strategist at RoboMarkets. “The uncertainty about this should have a significant impact on stock market activity in Frankfurt over the next two weeks.”
If its repaired gas turbine returns from Canada, Russia allegedly wants to restart energy supplies through the throttled Nord Stream 1 Baltic Sea pipeline. “If the turbine comes after the repair, it will allow for an increase in volume,” Kremlin spokesman Dmitry Peskov said, according to the Interfax agency.
At the Dutch gas trading point TTF, the upward trend in prices has stopped today. The listings for the next six months were clearly in the red but still around twice as high as a month ago at around 175 euros per megawatt hour.
Uniper calls for the state
The energy company Uniper, which is in financial difficulties, has submitted an application to the federal government for stabilization measures. As the company announced, these measures are aimed, among other things, at “ending the current accumulation of significant losses” and “covering Uniper’s liquidity needs”. Uniper was already in talks with the federal government about aid measures.
Uniper’s proposal also provides for the federal government to take a relevant stake in the company. In addition, the energy company wants to be able to pass on price increases to customers.
Porsche SE and VW preference lead the DAX
But back to the DAX. Papers from the holding company Porsche SE and preferred shares from Volkswagen took the lead in Germany’s most important share index. Apparently, the VW subsidiary Porsche AG is making progress with its IPO. According to a report by the Bloomberg news agency, VW has selected additional syndicate banks for the IPO of the sports car subsidiary. The IPO process could start in September and the initial listing could take place in October.
TAG shares suffer from capital increase
Shares in TAG Immobilien were under pressure due to a capital increase that had been decided. Shareholders are given the right to purchase 20 new shares for every 101 existing shares at a subscription price of EUR 6.90 per share. The measure, which comprises almost 29 million shares and is worth around 200 million euros, serves to refinance the takeover of the Polish company Robyg.
Airbus on course for growth
The world’s largest aircraft manufacturer Airbus increased its deliveries significantly in June. The DAX group handed over 60 machines to its customers last month, 13 more than in May. For its annual target of around 720 aircraft to be delivered, Airbus still has to step up the pace: After the first six months, only 297 of them have been completed. However, the manufacturer’s delivery figures usually increase significantly towards the end of the year.
Eurowings increases prices by at least ten percent
The Lufthansa offshoot Eurowings wants to increase ticket prices by at least ten percent due to increased energy costs. That said the chairman of the board, Jens Bischof, of the daily newspaper “Rheinische Post”. The reason given by Bischof was that the higher fuel prices would burden the company with more than 100 million euros. The burden of the oil price shock cannot be shouldered otherwise.
Special depreciation at ElringKlinger
The automotive supplier ElringKlinger posted write-downs of 86 million euros, partly because of the rise in interest rates and currency developments. This pushed earnings before interest and taxes (EBIT) well into the red in the second quarter. According to preliminary figures, the group is assuming a minus of 97 million euros – after a plus of 23 million euros in the second quarter of last year.
Twitter stock: Musk deal in serious jeopardy
The share of the short message service Twitter was clearly under pressure. The trigger was a report by the Washington Post that the ongoing conflict between Elon Musk and Twitter management over the number of spam and fake user accounts on the platform was seriously endangering the $44 billion takeover.