Status: 05/12/2022 09:45
After current US inflation data pushed investors away from Wall Street yesterday, the DAX also fell in the morning. Current producer prices indicate that inflation will also rise in this country.
At the start of trading, the DAX fell more than 2% to around 13,500 points. “Given the combination of economic risks and fears of interest rate hikes, the DAX cannot hold a shot at liberation,” commented Helaba’s market watchers in their daily outlook. Yesterday it rose 2.2% to 13,828.64 points. While US inflation data on Wednesday only briefly knocked out Germany’s leading index, things look very different today.
Worrying data on inflation
In the United States, inflation was 8.3% on a monthly basis, higher than analysts expected. “The April inflation data shows that hopes for a rapid easing of price pressure are premature. The Fed is therefore unlikely to deviate from its plan and will continue to gradually raise interest rates,” said Ulrich Stephan, chief investment strategist. for private and corporate clients at Deutsche Bank.
Commerzbank experts comment that the high level of inflation appears to be consolidating. “We expect the Fed to raise interest rates by 200 basis points by the end of the year.” This is bad news for investors, which is now apparently reflected in prices. Because rising key interest rates make bonds more attractive to investors, so that money can flow from the stock market to the bond market.
Update economy from 05/12/2022
Klaus-Rainer Jackisch, Human Resources, tagesschau24 9:05 am, May 12, 2022
Record increase in agricultural producer prices
Bad news in Germany too: producers of agricultural products raised prices at record speed in the first month after the start of the war in Ukraine. In March they increased by an average of 34.7 percent, as reported by the Federal Statistical Office. “This is the highest year-on-year price increase since the survey began in 1961,” he said. “Compared to February 2022 alone, prices have increased by 15.1 percent.”
It is foreseeable that the explosion in producer prices will ultimately reach the consumer and thus drive inflation further.
Wall Street can’t find a fund
In the US, the attempt to recover US stock exchanges also failed due to inflation data. Once again, it was the prices of the tech giants that drove the markets to the downside overall. Heavyweights like Apple, Amazon and Microsoft have come under pressure. The heavy Nasdaq 100 fell 3.06% to 11,967.56 points, dropping below 12,000 points for the first time since November 2020.
The Dow Jones lost 1% to 31,834.11 points. It is the lowest since March 2021. The market-wide S&P 500 fell 1.65% to 3935.18 points, the lowest in more than a year.
Asian equity markets are shaking
Asian exchanges shouldn’t escape the fight against inflation, says analyst Jeffrey Halley of broker Oanda. Singapore and South Korea have already begun to tighten monetary policy, as has India. Stocks in India and South Korea fell significantly and Japan’s leading Nikkei 225 index also weakened and lost 1.8% to 25,748.72 points.
The situation was similar on the Australian stock market. The S & P / ASX 200 fell 1.8% to 6941 points. The Hang Seng fell 2% to 19,438.25 points, while the CSI 300 index of the top 300 companies in mainland China fared better, down 0.5% to 3955.88 points.
Oil prices go down
Oil prices fell in early trading today, giving up some of the gains from the day before. In a longer comparison, however, they are still at a high level. In the morning, a barrel (159 liters) of North Sea Brent cost $ 105.99. It was $ 1.52 cheaper than on Wednesday. The price of a West Texas Intermediate (WTI) grade barrel fell from $ 1.59 to $ 104.12.
Market participants explained the price cuts on the one hand with the stronger US dollar, which made crude oil more expensive for stakeholders outside the dollar zone and thus dampened their demand.
Fraport: the number of passengers is growing sharply
At Frankfurt airport, passenger traffic in April reached its highest level since the start of the corona pandemic. Also due to the wave of travel at Easter, the operator Fraport counted almost four million passengers at the largest German airport, more than a million more than in March. That was about four times the number of passengers from the previous year, but still about a third fewer than before the crown pandemic in April 2019. The airport saw another drop in cargo business. In April, around 166,000 tons of cargo and air mail were handled in Frankfurt, 16.5% less than the previous year.
Encavis deserves more
Wind and solar farm operator Encavis made strong gains in the first quarter. Sales increased by 53% to € 90.4 million and operating profit (Ebitda) by 64% to € 64.4 million. Encavis also benefited from favorable weather conditions in the first three months.
Allianz sticks to the profit target despite the war in Ukraine
Despite the war in Ukraine and sanctions against Russia, the Allianz insurance group is on track to reach its profit target for the current year. Operating profit is expected to continue to reach € 12.4-14.4 billion. In the first quarter, Allianz achieved a turnover of 44 billion euros, approximately 6% more than the previous year. The end result, however, was only a profit of € 561 million. Because the group has set aside another 1.9 billion euros for the ongoing legal dispute with the main clients of its subsidiary of the Allianz Global Investors (AGI) fund, as also announced on Wednesday.
Russia’s burdens depress Siemens
The Russian business ruined Siemens’ earnings in the second quarter (at the end of March). Among other things, the company recorded an amortization charge of € 0.6 billion. They mainly refer to the train business. The company also believes that further charges in the three-digit mid-range of one million euros are possible – the time when they will be booked is still open. Due to the burden on Russia, after-tax profit fell by almost half to 1.2 billion euros.
RWE increases earnings
Energy group RWE earned significantly more in the first quarter, adjusted operating income (EBITDA) increased 65 percent to 1.46 billion euros. RWE produced over 20% more electricity from wind and sun. Since the group no longer accepts Russian coal due to UK sanctions, it has written off € 850 million on the long-term supply contract. RWE confirmed the forecasts for the full year, according to which the adjusted EBITDA at the group level should be between 3.6 and 4.0 billion euros.
Merck deserves more
Pharmaceutical and chemical group Merck KGaA increased the group’s sales in the first quarter by approximately twelve percent to nearly € 5.2 billion. Part of this was due to positive currency effects, which, net, accounted for just under 8%. The bottom line is that Merck earned € 884 million after tax, about 18% more than the previous year.
Good start to the year for Ströer
Compared to the same period of the previous year, Ströer’s sales in the first quarter increased by almost a quarter to 385 million euros. Digital advertising formats, in particular, have been well received. The bottom line is that the company has also made the leap back into the profit zone: while an accumulated loss of 9.5 million euros in the last quarter, eleven million euros are now stuck with the company.
Disney’s profits plummet despite the streaming business
High expenses and costs weighed on Walt Disney in the first quarter, but its major streaming business performed better than expected. Quarterly earnings were down about half to $ 470 million from the same period last year. However, the Disney + streaming service added 7.9 million subscribers in the quarter, beating analysts’ forecasts. At the end of the quarter, rival Netflix had a total of 137.7 million customers. This initially caused the stock to rise significantly in after-hour trading. Disney’s other streaming services Hulu and ESPN + also performed well.
Saudi Aramco surpasses Apple
Saudi Aramco has overtaken Apple as the world’s most valuable company. The partially state-owned company of Saudi Arabia, which ranks as the largest oil company in the world, was valued at $ 2.42 trillion based on its stock price at the close of the market on Wednesday. The stock market value of the US tech group Apple dropped to $ 2.37 trillion. While Saudi Aramco is benefiting from rising oil prices, tech stocks have plummeted in recent weeks.