Status: 06/16/2022 12:29
After the surprisingly significant increase in interest rates by the Swiss central bank, panic is spreading in the market. The DAX continues to slide. Where can the leading German index find support now?
The DAX extended its first losses during the morning. It drops to 13,084 points. This is less than 3.0 percent of the previous day’s closing price. The DAX thus reached a new low since March. The latest drastic central bank actions are causing unrest among investors.
The SNB’s decision as a warning sign
Markets not only have to digest that the US Federal Reserve hiked interest rates by 75 basis points yesterday, the highest since 1994. Most importantly, it is the surprising rate hike from the Swiss National Bank (SNB) that hits the already fragile ones hard today. European stock exchanges. The SNB had raised the benchmark rate by 0.5 percentage points and described it as a measure against inflationary pressures.
Markets interpret this as a warning sign: more and more central banks apparently fear losing control over inflation expectations after long hesitating to identify high inflation rates as a permanent problem.
Update economy from 06/16/2022
Dorothee Holz, HR, 16.6.2022 10:09
Do central banks react too late?
So now the Fed, the SNB and presumably soon the European Central Bank (ECB), on which the pressure is mounting since the SNB’s decision, are reacting. The SNB’s decision shows that virtually all major central banks are heading in the same direction, said Chris Scicluna of Daiwa Capital Markets.
But is monetary policy tightening too late to contain inflation? And what is the collateral damage? Will rising interest rates freeze the economy and plunge the US and Europe into recession?
Yields skyrocketing, DAX in deep frenzy
It is questions like these that are on investors’ minds and are currently giving them a large margin on stocks. Especially since the SNB’s surprising rise in interest rates also forced a new sell-off on the bond markets; in return, yields have soared.
With today’s price drop and the marking of a new three-month low, the technical picture in the DAX is also becoming more murky. The German stock market barometer had already sent a sell signal a few days earlier when it fell below the low of the beginning of May (13,381 points).
HSBC Trinkaus technical analysts warn that this negative trend now also raises fears of rejoining the previous year’s low from early March at 12,439 points.
Witches’ Saturday provides additional volatility
The upcoming maturity date is causing further uncertainty among investors. On this day, investors close their long and short positions on the futures exchanges. In advance, they try to steer prices on spot markets, such as the DAX, in the desired direction. This is likely to further increase the ups and downs of prices in the short term.
Oil prices are falling
The decrease in investor risk aversion and the rise in the dollar are also having an impact on the oil market. At lunchtime, a barrel (159 liters) of North Sea Brent costs US $ 118.06. This is 1.8 percent less than the day before.
Euro and gold with losses
Meanwhile, the big hike in US interest rates is giving the dollar a boost. In return, the euro lost 0.6 percent to $ 1.0401. An ounce of gold costs $ 1829.
The Zalando title collapses
Documents from online fashion retailer Zalando take control of the red lantern in the DAX. They plummeted nearly 12% at lunchtime, dropping to their lowest level since February 2019. A bearish forecast from UK competitor Asos and a disappointing interim report from Boohoo are creating a bad mood in the industry.
The EU car market continues to collapse
The DAX also focuses on automotive stocks. In May, new car registrations in the European Union fell by 11% to 791,000 vehicles, as announced today by the manufacturers’ association Acea. That was the 10th least consecutive month. However, the minus was not as great as in the previous month (20.6%).
Südzucker shares remain in demand
In the MDAX, Südzucker shares increased the previous day’s earnings by more than three percent at lunchtime. Warburg Research analyst Oliver Schwarz dropped his sell recommendation for the stock. In doing so, he was reacting to the increase in annual targets, mainly thanks to the successful development of the biofuel subsidiary CropEnergies.
Nordex flies out of the index
Nordex has received the receipt for the deferred delivery of the quarterly data. Shares of the wind turbine manufacturer will be removed from SDAX and TecDAX, as announced by Deutsche Börse as an index provider. In return, the specialist pharmaceutical company Medios returned to the index of smaller stocks. In the TecDAX, Nordex is replaced by SMA Solar Technology.
The metro separates from business in Belgium
Wholesaler Metro is pulling the rope in its loss-making business in Belgium after more than 50 years. Subsidiary Makro Cash & Carry Belgium will be sold to a financial vehicle backed by restructuring experts from Germany’s One Square Advisors, Metro announced. Metro hopes the sale will improve its operating profit (EBITDA) by 20 million euros per year.
Financial investors own 84% of Aareal Bank
Aareal Bank in Wiesbaden is now 84% in the hands of financial investors. The Advent International consortium, Centerbridge, and the Canada Pension Plan Investment Board (CPPIB) have secured 83.8 percent of the real estate financier’s stock since the last acceptance period.
Erste Group gets a new boss
Austria’s largest bank Erste Group has found a successor for outgoing CEO Bernhard Spalt. The supervisory board looked after the current member of the Austrian subsidiary’s corporate client board, Willi Cernko, who has headed the bank since July 1, the Money House announced Wednesday evening. Spalt recently announced surprisingly that he does not want to extend his contract.
Roche Receives Emergency Approval for Nasal Corona PCR Test
Swiss pharmaceutical company Roche has received emergency clearance from the US FDA health authority for the “Cobas SARS-CoV-2 Duo” corona PCR test. It is the first nasal PCR test that detects Covid disease and viral load at the same time. The viral load helps in the evaluation and monitoring of infected patients.
Youtube Shorts attracts 1.5 billion users
According to its own statements, YouTube has caught up with its competitor Tiktok when it comes to short videos. As announced yesterday by the video service, more than 1.5 billion users per month are now using the offer with videos up to 60 seconds long. “The shorts have really caught on,” said product manager Neal Mohan.
EMA examines the Pfizer / BioNTech vaccine variant
The European Medicines Agency EMA has initiated the rapid test procedure for a corona vaccine from manufacturers Pfizer and BioNTech that has been adapted to variants of the virus. The vaccine is intended to provide more targeted protection against the omicron variant of the virus. So far, no vaccine has been approved in the EU that also targets corona virus variants.
FDA consultants recommend corona vaccines for younger children
An advisory board of the U.S. Food and Drug Administration (FDA) has supported the use of coronavirus vaccines in children between the ages of six months and five years. Both the vaccine from manufacturers BioNTech and Pfizer and Moderna’s preparation could be used for this, the committee unanimously agreed. The FDA usually follows the consultants’ evaluation.