Status: 06/14/2022 12:32
It was predictable that today’s DAX recovery would not last. The risks to equity markets associated with further tightening of US monetary policy are too great.
The DAX rose to 13,570 points at the start of trading. But as expected, the recovery didn’t go far today: it’s already over. The main German index is currently down 0.7% and is again below the 13,400 mark at 13,333 points.
breath on the stock market
“Investors don’t like the cocktail of inflation, interest rates and the resulting fear of recession at all,” commented market watcher Christian Henke of Broker IG. The critical situation is unlikely to change anytime soon: “The environment for German equities is and will remain negative,” write Index Radar market watchers. “The war at the door, inflation, rising interest rates and falling profit expectations are reaching previously quite high valuation levels.”
Update economy from 06/14/2022
Dorothee Holz, HR, 14.6.2022 12:15
Experts draw another arc to illustrate the current situation: Since 2009, with a Covid outage, the DAX has continuously risen from under 4,000 to over 16,000 points. “Anyone who has speculated that this development will continue indefinitely without any big breath should take a look at historical price developments over the past few decades, especially in times of rising interest rates.”
How far will the Fed go?
According to experts, the US Federal Reserve should definitely continue the aforementioned tightening path. The Fed’s interest rate decision is already on the agenda in the US on Wednesday. A further 0.5 point increase in the benchmark rate is considered a consensus among analysts.
In recent days, however, more and more experts have raised their expectations given the high inflation. Bank ING analysts no longer want to rule out a full percentage point tightening altogether. On the financial markets, expectations are clearly oriented towards an increase of 0.75 points. If the interest rate step turns out to be stronger than expected, the stock market is likely to react sensitively.
“Looking ahead, stubborn inflation is leading to an even more aggressive Fed stance, posing a serious risk of tightening and, ultimately, greater downside risk to the already faltering growth outlook,” said Allison Boxer. US economist from Pimco.
“A touch of recovery”
Against the backdrop of the severe problems in the equity markets, the positive ZEW index is hardly noticed. After all, the economic expectations of German financial experts have risen from a relatively low level. In June, the ZEW sentiment barometer rose 6.3 points from the previous month, dropping to minus 28 points.
“This is a hint of improvement in the red. There is currently little room for optimism in the global environment,” says Alexander Krüger, chief economist at Hauck Aufhäuser Lampe. Above all, faltering delivery logistics and high inflationary pressure weigh on mood. Confidence will not return until geopolitics is back on track “.
The euro temporarily drops below US $ 1.04
The euro recently fell briefly below the US dollar 1.04 mark. Overnight, the common currency cost a low of $ 1.0397, which is less than a month ago. The euro is currently on the rise.
The strong dollar is putting considerable pressure on the euro. The greenback is currently benefiting from expectations of a sharp turnaround in US interest rates.
Oil prices hardly move
Oil prices initially barely moved on Tuesday. At midday, a barrel (159 liters) of North Sea Brent costs about US $ 122.
The price for a barrel of the US West Texas Intermediate (WTI) variety is currently dropping slightly to just under $ 121. The price of oil therefore remains at high levels. They have increased by around 55% since the beginning of the year.
Bitcoin continues to fall
The descent of Bitcoin and many other cryptocurrencies continues. Today, the largest digital currency by market value has dropped towards the $ 20,000 mark. The low on the Bitfinex trading platform was around $ 20,860, the lowest in a year and a half. The record was reached in November at around $ 69,000.
Concerns about inflation and interest rates are the main reasons for the drop in prices. Risky investments such as digital currencies are burdened by the sharp turnaround in interest rates because they do not generate any current interest income.
Air France-KLM raises funds
The airline Air France-KLM has raised billions from investors to repay government aid from the Crown crisis. Overall, the group collected almost € 2.26 billion with the issue of new shares. Most of the money will go into the replacement of subordinated bonds for an amount of about 1.7 billion euros, with which the French state had helped the company a good year ago. The remaining proceeds are intended for debt relief.
Morphosys wants to do research with Pfizer
Biotech firm Morphosys and its partner Incyte are engaging Pfizer for a new research alliance. The tests will combine Morphosys’ anticancer drug Monjuvi with Pfizer’s drug lenalidomide and a certain fusion protein to administer to blood cancer patients with diffuse large B-cell lymphoma (DLBCL). Morphosys thus expands its research pipeline with Monjuvi, which has already been approved in the USA and marketed in Europe under the name Minjuvi.
Atos tests split and bring new garments
French IT company Atos is reacting to the headwind with a new corporate structure. The demerger into two listed companies is being considered. Atos also announced that CEO Rodolphe Belmer will leave the company at the end of September. CFO Uwe Stelter surprisingly announced his retirement in March. Atos recently surprised with two profit warnings in a short period of time. Siemens is a major shareholder of Atos.
Evotec agrees to cooperate with the J&J branch
The biotech company Evotec wants to research new active ingredients together with a subsidiary of the US pharmaceutical company Johnson & Johnson. Evotec has announced research related to success and payment of milestones of up to 210 million euros per project from the cooperation. Evotec will receive royalties on potential products resulting from the collaboration.
Truckers’ strike in South Korea halts Samsung’s chip production in China
Samsung Electronics’ semiconductor manufacturing in China has been halted due to a trucker strike in South Korea. A South Korean company that produces isopropyl alcohol (IPA) for cleaning semiconductor chips is unable to ship the product to a ‘Chinese company that supplies wafers to a Samsung Electronics chip factory in China due to the blockade of South Korean truckers, the trade association Korea International Trade Association (Kita) with. The export of 90 tons of IPA or the one week delivery was delayed.
The truckers began retiring on June 7 in order to secure higher wages and a minimum wage guarantee in view of the sharp rise in fuel prices. This puts additional pressure on supply chains, which are already under pressure around the world.
Hornbach Holding Lowers Earnings Forecasts
Hardware store operator Hornbach Holding is more pessimistic about profits in the current fiscal year due to rising prices and ongoing problems in supply chains. Adjusted profit before interest and taxes (EBIT) will decline by a low double-digit percentage in 2022/23 from the previous year’s € 362.6 million. Previously, Hornbach had only assumed a slight negative. In terms of net sales, however, Hornbach is making no changes to its expectations for the current year.