market report
Status: 02/17/2022 10:24 p.m
The US stock markets are not calming down. Fears about interest rates and the worsening of the situation in Ukraine have caused the stock market to suffer heavy losses again. The DAX also fell over the course of the year.
US stock markets closed weaker amid a host of concerns. “You’ve got inflation that seems widespread, there’s a looming change in Federal Reserve policy, and then there’s that the ongoing tensions with Russia and Ukraine”said equity strategist Terry Sandven of wealth manager US Bank Wealth Management.
This difficult situation has often weighed on Wall Street recently and is causing a lot of uncertainty. Investors withdrew across the board and pushed the leading index Dow Jones down 1.78 percent to 34,312 points. The other major indices also came under severe pressure. The market-wide S&P 500 index fell 2.12 percent to 4380 points. The Nasdaq technology exchange was the weakest, falling 2.88 points to 13,716 positions. The selection index fell by 2.96 percent to 14,171 points.
Marc Chandler, chief strategist at trading house Bannockburn Global Forex, also pointed to the upcoming long weekend due to a US bank holiday on Monday: “There is no incentive for a market participant to fight risk-off sentiment ahead of a weekend when anything can happen. “
Fed bankers for significant rate hike
The topic of interest rates is also a topic that is currently being discussed again and again. The key interest rate should rise by a full percentage point by the middle of the year, the head of the St. Louis Fed district, James Bullard, told the TV channel CNN on Thursday. The key rate is currently still in the range from zero to 0.25 percent.
Bullard pointed out that the Fed is missing its inflation target and is still buying securities: “This is the moment when we have to come to less economic stimulus.” Bullard had already spoken out in favor of significant interest rate hikes in the recent past.
“I think the war on inflation will have a bigger impact than a war in Ukraine,” CFRA Research investment strategist Sam Stovall said of the market development. The Fed is under pressure to possibly raise interest rates by half a percentage point with the first step and thus more than initially expected.
US job market weaker than expected
Data from the labor market did not move market activity today. Overall, a surprising number of 248,000 Americans filed initial applications for unemployment benefits. Experts had expected just 219,000. The US still faces a labor shortage, with a record-breaking 10.9 million job vacancies as of the end of December.
While there may still be volatility in the job market in the near term, requests for assistance should fall further below pre-pandemic levels in the coming months, said Veronica Clark, an analyst at Citigroup in New York. “This would reflect an overall low level of layoffs.” After all, companies would have problems even achieving the desired level of employment.
DAX slips into the red
The DAX ended trading today with significant losses across all sectors. Only some company news that was positively received and the investors’ preference for more defensive stocks ended up on the plus side. However, this could not offset the losses. The DAX closed down 0.67 percent at 15,267 points and followed a weak US stock market further down in late trading.
Initially stronger gains, which drove the index to its daily high of 15,440 points, were completely lost. The market is thus building on the previously volatile weekend trend, which plunges investors into a roller coaster ride of emotions. Today’s low for the day was 15,206 points.
Ukraine crisis not over yet
Furthermore, the Ukraine crisis caused a lot of nervousness on the floor, especially since NATO has not yet confirmed a Russian troop withdrawal. Russia has also expelled a high-ranking US diplomat from Moscow and is demanding the withdrawal of all US troops from Central and Eastern Europe.
“The market will remain hostage to incoming headlines until there is some clarity on the situation,” said investment analyst Marios Hadjikyriacos of online brokerage XM on the situation in Ukraine.
The geostrategic worries were compounded by last night’s inconclusive Fed minutes, which fueled interest rate fears among investors on both sides of the Atlantic. In particular, they had expected more information about the pace at which the powerful US Federal Reserve (Fed) would tighten interest rates in the future. In the best central bank manner, however, this leaves all doors open.
Gold and government bonds in demand during the crisis
The fact that investors see reason for caution is also shown by the current development of the gold price. It soared to an eight-month high of $1,899 an ounce. Commodity experts at Commerzbank sum up that the unclear news situation surrounding the Ukraine crisis is apparently leading to strong demand for gold as a safe haven.
Government bond prices also rose, while yields on ten-year US Treasuries fell below two percent. Federal bonds with the same term also tended positively and yielded 0.22 percent after 0.27 percent previously. The euro is little changed in US trading at $1.1361. The European Central Bank set the reference rate at 1.1370 (Wednesday: 1.1372) dollars.
Oil is getting cheaper
The price fluctuations on the crude oil market continue. After strong increases on the previous day, prices are falling again today. A barrel (159 liters) of the North Sea Brent variety and the American WTI variety cost almost two percent less.
The oil market is caught between the Ukraine crisis and Iran news, says Carsten Fritsch, a commodity expert at Commerzbank.
Billions debacle and record year for Allianz
A debacle involving risky financial investments in the USA overshadows a record year for Allianz, Europe’s largest insurer. US investors lost billions with AllianzGI hedge funds at the beginning of the Corona crisis and sued the group for more than six billion dollars. After settlement negotiations with the largest investors, the insurance giant from the DAX expects charges of more than 3.7 billion euros before taxes, as he announced in the evening after the stock exchange closed.
Because the operational business is booming more than expected, Allianz can cope well. Profits fell just 3 percent last year to 6.6 billion euros, despite a net provision for hedge fund losses of 2.8 billion euros.
All in all, that was the lowest profit since 2013. Nevertheless, the dividend is to be increased sharply by EUR 1.20 to EUR 10.80 per share. In addition, Allianz also wants to buy back its own shares this year and thus return up to one billion euros in excess capital to the shareholders. After hours, the share held its own at the Xetra level. The paper was 1.29 percent lighter at 222.50 euros.
RWE raises forecast
The energy group RWE is more optimistic than before about the new fiscal year. The board today raised its forecast. According to this, RWE 2022 expects a result of between 3.6 and 4.0 billion euros for adjusted EBITDA at group level. So far, the company had promised a range of 3.3 to 3.6 billion. RWE named 90 cents per share as a dividend target. Investors reacted enthusiastically, the titles rose to their highest level since 2011 and were at the top of the DAX.
Record profit at Airbus
The world’s largest aircraft manufacturer Airbus In the second Corona year 2021, the highest profit in its history was achieved. Thanks to increased aircraft deliveries and savings, the surplus of 4.2 billion euros exceeded the previous record profit of 2018. In 2019 and 2020 Airbus had made billions in losses, first due to a penalty for allegations of corruption, then because of the corona crisis and expensive dismantling thousands of jobs.
Split rumors drive the Conti share
Bucking the trend, Continental shares in the DAX gained more than three percent today. According to a press report, the car supplier’s ideas about splitting up the group go beyond recently circulated ideas. There are already plans to split the group into four independent subdivisions, reported today the “Manager Magazin” (“MM”), citing corporate circles.
That would be much more ambitious steps than the ones reported by the “Handelsblatt”, which dealt with the possible independence of the unit for autonomous driving and its possible partial IPO. The report gives new fuel to speculation about more radical steps. The aim of management and chief supervisor Wolfgang Reitzle is to significantly increase the stock market value.
Commerzbank is back in the black
the Commerzbank returned to the black in 2021 despite high costs for the restructuring of the group. The bottom line was a profit of 430 million euros in 2021, after a loss of 2.87 billion euros had been reported in the previous year.
The bank wants to increase its consolidated profit to more than one billion euros in the current year. “We are aiming to pay a dividend for the 2022 financial year,” explained CEO Manfred Knof.
Walmart is confident
The share of the world’s largest retailer, which is included in the Dow Jones, bucked the trend by a good 2.0 percent and thus provided a ray of hope. Because strong demand makes the US retail giant confident that it will grow more strongly than expected in the financial year that has been running since February.
Despite disrupted supply chains and cost increases, adjusted earnings per share are expected to increase by five to six percent and like-for-like sales by a little more than three percent. Analysts expected earnings per share to increase by 4.4 percent and revenue to rise by 2.8 percent. In the fourth quarter of last fiscal year, Walmart’s sales rose 0.5 percent to $152.8 billion, beating market expectations of a 0.4 percent decline to $151.53 billion.
Amazon expands cloud service in Germany
Amazon’s cloud service AWS is expanding its range in Germany with infrastructure for particularly short response times, which is required for cloud video games, live video streaming or technical simulations. AWS provides fast response data services in additional “Local Zones” near large population or industrial centers. The first two of them in Germany open in Berlin and Munich. So far, such “local zones” have only existed in 16 US cities. Now they have been announced for a total of 32 cities in 26 countries.
Record numbers at Nvidia
Despite good business figures, Nvidia shares slipped. The need for chips for artificial intelligence and graphics cards is driving the business of semiconductor specialist Nvidia to record levels. Sales increased in the fourth business quarter, which ended in January, by 53 percent to a good $7.6 billion. The bottom line was three billion dollars, a little more than twice as much as in the same quarter last year.
In the gaming sector, Nvidia sales of graphics cards increased by 37 percent to $3.42 billion last quarter. The data center business is almost as big, jumping 72 percent to $3.26 billion.