Stock prices rising: euro weak as DAX booster

market report

Status: 04/29/2022 12:57

At the end of the week, the leading German index recovered and almost equalized the losses it suffered over the course of the week. The tailwind for the DAX also comes from the weak euro.

The German stock market is facing a conciliatory weekly close. The DAX was initially able to further expand its early gains over the course of trading. At the top it goes by 1.4 percent to 14,173 points. At lunchtime, the DAX is trading at 14,100 points; the main German index almost recovered the losses accumulated this week. For the month of April, however, the balance is negative.

Euro towards parity?

Tailwind for DAX courses comes not only from US exchanges, but also from the foreign exchange market. The euro slipped below the $ 1.05 mark yesterday for the first time in more than five years. A weak euro benefits German export companies, which are heavily weighted in the DAX.

The reasons for the euro’s weakness are obvious: on the one hand, the widening interest rate gap in favor of the US dollar, on the other, the threatening scenario of a gas freeze – with fatal economic consequences. The euro is therefore sliding further in the direction of levels that would be compatible with a gas crisis, an EU-wide recession and possibly a blow to interest rate normalization, explains Ulrich Leuchtmann, a foreign exchange expert at Commerzbank. “And from my point of view, it would be at least one level around par.”

The eurozone’s high inflation rate increases pressure on the ECB

The only question is whether the ECB will indeed be able to maintain its extremely slack course for much longer given the consistently high inflation rates in the euro countries. Inflation in the euro area is expected to have reached an all-time high of 7.5% in April, according to a flash estimate by the EU statistical agency Eurostat. In March, inflation was 7.4 percent.

Update economy from April 29, 2022

Klaus-Rainer Jackisch, Human Resources, tagesschau24 9:05 am, April 29, 2022

Commerzbank economist Christoph Weil commented that it is only thanks to the moderate decline in energy prices that the inflation rate covering all goods has increased only slightly. “This increases the pressure on the ECB to move away from ultra-expansionary monetary policy.” Ulrike Kastens, European economist at DWS asset manager, also sees the ECB under pressure: “The market is already pricing in an initial interest rate hike in July 2022. The ECB should give in to this and quickly initiate the necessary policy normalization. monetary “.

Germany avoids technical recession

Meanwhile, the favorable wind for the DAX is also coming from the new German economic data. The German economy grew slightly at the beginning of 2022. Between January and March, gross domestic product increased by 0.2 percent compared to the previous quarter; it was thus possible to avoid slipping into a technical recession (GDP contraction for two consecutive quarters).

“After the slight pick-up in the Ifo business climate in April, this is the second economic development report this week that exudes cautious confidence,” said LBBW economist Elmar Völker.

Future Dow and Nasdaq in decline

On Wall Street, things are likely to go downhill early in today’s trading. The Dow Jones Standard Value Index futures are currently trading 0.4% lower. The future of the high-tech Nasdaq even lost 0.9%. The day before, good quarterly data from Facebook’s parent company Meta had boosted courses.

Apple stocks under pressure due to weak prospects

At the weekend on the New York stock exchanges, the focus should once again be on technology stocks. Apple and Amazon opened their books yesterday after the US stock market closed. After a good start to the year, Apple expects big problems. Blockages in China are likely to make production more difficult. The conservative outlook causes a price less than two percent in pre-market trading.

Amazon investors flee

Amazon shares even fell more than 8% in pre-market trading. The activity of the world’s largest online retailer was surprisingly low in the first quarter. Sales increased 7% to $ 116.4 billion – Amazon experienced the weakest growth in about two decades.

The price of oil continues to rise

Investors’ risk appetite, which has increased again, is also being reflected in the oil market in the meantime. At lunchtime, a barrel (159 liters) of North Sea Brent oil costs $ 109.37. This is 1.8 percent more than the day before. The price of a barrel of the US WTI variety increased by 1.5% to $ 106.45.

Panama wants to allow Bitcoin & Co as a means of payment

Panama is the second Latin American country on the road to enabling digital assets as a regular means of payment. Unlike El Salvador, which was the first country in the world to admit Bitcoin as legal tender in September, Panama doesn’t want to commit to a specific cryptocurrency.

Henkel shares collapse

In the DAX, Henkel caused a stir with a profit warning. The price has slipped nearly 8% to its lowest level in nearly ten years. Due to rising costs of raw materials and logistics and the aftermath of the war in Ukraine, earnings per share are likely to plummet by up to 35% this year.

MTU asked for the numbers

Munich-based engine manufacturer MTU started the year with a strong increase in sales and profits. However, due to the sanctions against Russia, MTU had to write off 52 million euros, mainly due to the engine of the Russian medium-range jet Irkut MS-21, which MTU is working on.

BASF confirms its annual targets, but sees risks

Chemical company BASF is meeting its annual goals despite the economic consequences of the war in Ukraine. However, the market environment remains characterized by an exceptionally high level of uncertainty, BASF warned on the day of the Annual General Meeting.

Mercedes-Benz invites for the first time to the shareholders’ meeting

Today Mercedes-Benz invites for the first time to a general meeting. The manufacturer with the star brings together the car and van business of the former Daimler group. Fund firm Union Investment criticized the Stuttgart firm’s disappointing climate balance sheet.

Higher costs are borne by Fuchs Petrolub

Higher prices and problems in the supply chain are dampening optimism at lubricant manufacturer Fuchs Petrolub. The group now expects only an operating result (EBIT) at the previous year’s level of 363 million euros. CEO Stefan Fuchs is particularly concerned about the availability of raw materials.

Erste Group grows at the beginning of the year

Austria’s largest financial institution, Erste Group, has grown thanks to the growth of its operating core business and lower bad debt provisions. The bottom line is that profits rose to € 448.8 million in the first quarter after € 355.1 million the previous year. On average, analysts had expected a net profit of 410 million euros.

OMV oil and gas group with profit jump

The OMV Group achieved a jump in profits thanks to the sharp rise in oil and gas prices and growth in all business areas. The conclusion is that the profit has risen to 1.1 billion euros after 424 million euros. OMV is therefore above the expectations of analysts who, according to a survey by the group, expected an average surplus of 1.0 billion euros.

More cautious tones from Intel

US chip group Intel is cautious in light of supply chain uncertainties and concerns about weaker PC demand. For the current quarter, Intel expects revenues of $ 18 billion. Compared to the previous quarter, this would correspond to less than two per cent, compared to the same quarter of the previous year by almost three per cent. In the first quarter, sales fell 1% to $ 18.4 billion.

Musk downloads more Tesla shares

Elon Musk sold 4.4 million Tesla shares worth $ 3.99 billion. This is evident from the US securities documents. Musk announced via Twitter’s news service that no further Tesla stock sales were planned for the time being. Tesla lost ground yesterday as investors fear Musk will have to sell stock to finance the Twitter acquisition.

Gazprom dampens outlook after record profit

Russian energy giant Gazprom made a record profit of 2.09 trillion rubles (about 27.5 billion euros) last year, but lowered expectations for 2022 due to Western sanctions. For the current year, Gazprom now expects a drop in production of around 4%, while the company previously expected an increase.

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