market report
Investors are reacting with relief to the end of the government coalition. The DAX is recovering the price loss caused by Donald Trump’s election as US President yesterday.
An old stock market saying goes that political stock markets have short legs. The coming weeks will show whether this is true; political events are currently determining what is happening on the floor.
After the re-election of Donald Trump was the dominant topic yesterday, market players are reacting to the end of the Berlin traffic light coalition today – and they are extremely pleased. The DAX rose by 1.3 percent to 19,281 points by midday.
Economists are calm about the end of the traffic light coalition; positive reactions predominate. The central demand from associations and economists after the end of the coalition is new elections – and as soon as possible. “The end of the traffic light government was long overdue and therefore did not come as too much of a surprise,” wrote Carsten Mumm from the Donner & Reuschel bank. Now there is a chance of an “economic and political awakening”.
“This is good news for Germany. Only with early elections can the Gordian knot in which this government has entangled itself be cut. A new government may be able to use the new coordinates that have emerged from the elections in the USA better taken into account than a traffic light coalition burdened with arguments and animosity,” comments Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
Investors usually do not appreciate an uncertain situation over a longer period of time. “The break in the government coalition may create space for economic stimulus and economic policy reforms in the future, but initially the government is no longer able to act, which is likely to contribute to uncertainty,” comment Helaba market observers.
Christian Zoller, market expert at ING, sees it similarly: “Germany needs a strong government and a longer period of suspension would not only be further poison for the economy, but also for the stock markets. However, a new beginning should and could give the DAX further impetus contribute to a year-end rally,” is his assessment.
Yesterday the mood on the German stock market was still extremely bad. Due to fears of trade barriers, the DAX lost 1.1 percent to 19,039 points. Donald Trump had announced that he would impose a punitive tariff of 60 percent on products from China and ten to 20 percent on products from Germany and all other parts of the world. The European selection index EuroStoxx50 lost 1.4 percent.
In addition to the two dominant political topics, investors will also keep an eye on today’s interest rate decision by the US Federal Reserve. Economists mostly expect an interest rate cut of 0.25 percentage points in a range of 4.50 to 4.75 percent. Donald Trump’s victory in the US presidential election is unlikely to have an impact on the decision. In the medium term, however, the election victory could have a strong impact on US monetary policy.
“Lower corporate taxes and higher tariffs also have implications for US monetary policy,” commented Thomas Gitzel, chief economist at VP Bank. Lower tax rates would promote growth and higher tariffs would drive inflation. “If that were to happen, the US Federal Reserve would also have to say goodbye to its planned interest rate cuts,” writes Gitzel.
Yesterday, Trump’s election victory had US investors euphoric and sent Wall Street soaring. All three major US indices jumped to record highs, with the Dow Jones closing 3.6 percent higher at 43,729 points. The technology-heavy Nasdaq advanced three percent to 18,983 points. The broad S&P 500 gained 2.5 percent to 5,929 jobs.
Things are unlikely to continue today in the USA at the same pace as yesterday. It currently looks as if investors are significantly slowing the pace of the rally. Nevertheless, US futures indicate further slight gains.
The price of the euro rose slightly before the Fed’s interest rate decision. This means he has made up for some of the significant price losses from the previous day. After Donald Trump’s victory in the presidential election, the euro temporarily fell below $1.07, its lowest level in around four months. On the foreign exchange market, however, the focus is once again more on monetary policy as the day progresses.
Rheinmetall is heading for a record course due to increased arms spending by Western countries following the Russian attack on Ukraine. After nine months, sales climbed by 36 percent to around 6.3 billion euros. The operating result increased by 72 percent to 705 million euros. Order intake climbed to over 21 billion euros. The order backlog now reached a total of around 52 billion euros.
According to a media report, the Ingolstadt car manufacturer Audi is facing job cuts. In the medium term, jobs should be cut mainly in the indirect area; in development alone there will be more than 2,000 jobs, reported “Manager Magazine” citing insiders.
The target in the indirect area is a reduction of around 15 percent, which would be around 4,500 jobs in Germany alone. The Volkswagen subsidiary confirmed that the board is currently negotiating with the works council, but did not comment on the number of positions that may be affected.
Hurricanes and other disasters cost the world’s largest reinsurer Munich Re more than twice as much in the third quarter as a year earlier. The major losses in reinsurance totaled 1.6 billion euros. Hurricane “Helene” was the most expensive in the USA, costing half a billion euros. In the third quarter, Munich Re earned a total of 930 million euros due to the high damage, a fifth less than a year earlier.
Increased sales volumes and savings have helped the specialty chemicals group Lanxess to achieve a jump in earnings. The operating result (Ebitda) before special items rose by more than 45 percent to 173 million euros in the third quarter. At 1.598 billion euros, sales were almost at the level of the same period last year, as headwinds came from lower sales prices.
In the first nine months, wind turbine manufacturer Nordex’s sales increased by 14 percent to 5.1 billion euros. Ebitda improved significantly to 189 million euros. There was a loss of 67 million euros last year. The Ebitda margin is 3.7 percent. In the third quarter, the margin improved from 0.1 to 4.3 percent.
The Markets: A Comedy of Errors or a House of Cards?
Well, well, well, if it isn’t the fickle finger of fate playing havoc with our beloved markets again! Investors everywhere are back from the brink with a manic sense of relief following the end of the German government coalition. Apparently, when you react to politics like toddlers react to new candy, the DAX rises — up 1.3% to 19,281 points! I guess it’s universally true that where there’s chaos, there’s a chance to make a quick buck! More exciting than a surprise party planned for your introverted uncle!
Now, here’s where the plot thickens. Some economists are scratching their heads, and maybe a few rear ends, wondering if this is all just a flash in the pan or if it’s going to cause lasting change. You see, when political events are the primary movers in the market, it’s like reading tea leaves while juggling – intriguing, but someone’s probably going to get hurt. Political stock markets have short legs, they say. If that’s true, we might need to keep the crutches handy for the next few weeks!
And speaking of intriguing tea leaves, economists are desperately clutching their coffee cups and muttering that the end of the coalition was a surprise that wasn’t a surprise. “An economic and political awakening,” said one Carsten Mumm from Donner & Reuschel bank. Sounds like a self-help book that didn’t quite make it! Maybe written by a politician, but I digress. The chance to finally cut the Gordian knot of governmental deadlock is, apparently, good news for Germany. I wonder if they’re bringing back the German efficiency and order – in which case, investors might want to strap in!
But hold your horses! While investors might feel a rush of optimism, it seems they also suffer from a sort of separation anxiety. Uncertainty, they say, is bad for business. “The break in the government coalition may create some space for reforms,” observed some wise folks at Helaba. But let’s be real: without a functioning government, that’s like hoping a cat will cough up a hairball made of cash. Not impossible, but don’t hold your breath! Christian Zoller from ING chimed in too, suggesting that Germany needs a robust government, or we’re just watching the slow drip of economic disaster unfold. Who’s bringing the popcorn?
Meanwhile, across the ocean, we’ve got Trump’s victory sending US markets sky-high – or was it just a bouncy castle? Wall Street’s euphoric rally saw Dow Jones and others hit record highs. In all seriousness, though, it’s a wild day when market justice seems to smile down upon one person’s electoral victory, while trading feels more confusing than quantum physics!
And in this exhilarating ride of stock ticker roulette, we have hurricanes, job cuts, and increasing arms sales causing enough excitement to make a reality TV show look tame. Isn’t it just like life? One moment, you’re celebrating patriotism through arms spending, and the next, you’re sobering up with job losses at Audi — proving once again that in the world of finance, for every action, there’s an equal and sometimes more inconvenient reaction.
Lastly, let’s not forget our friends at Munich Re facing calamities and costs that sound more like the last round of Monopoly gone wrong rather than the core of a reinsurance business. Just remember, if you’re feeling down about these announcements, at least nobody’s throwing shade on the wind turbine market; Nordex is coming in strong with record sales! Isn’t it nice to see something green amongst all the doom and gloom?
In conclusion, as we keep our eyes peeled for the shifts and turns of this thrilling plot, let’s remember: in investing and politics, the only thing you can count on is…well…uncertainty. So, whether you’re celebrating or sobering up, grab a seat on this tumultuous ride, and maybe, just maybe, we’ll learn a thing or two along the way. Or at least get a good laugh out of it!
market report
Investors are expressing a sigh of relief following the dissolution of the government coalition, as market analysts indicate that the DAX index is staging a strong recovery after the initial dip triggered by Donald Trump’s re-election as the President of the United States yesterday.
Political events currently wield substantial influence over market dynamics, a phenomenon encapsulated by an old stock market axiom stating that political stock markets are often characterized by their transient nature. This suggests that the forthcoming weeks will be pivotal in determining the validity of this belief.
The re-election of Donald Trump dominated headlines yesterday, but today, investors are primarily focused on the announcement of the end of the Berlin traffic light coalition and are reacting positively to this news. By midday, the DAX had climbed by 1.3 percent, reaching 19,281 points, reflecting a renewed sense of optimism among market participants.
The sentiment among economists is notably calm in light of the coalition’s termination; predominant reactions lean towards optimism. In the aftermath, there is a widespread call from various associations and economists for new elections, with many expressing that this change was long overdue. Carsten Mumm from Donner & Reuschel noted that the government’s dissolution had been anticipated, suggesting the possibility of an “economic and political awakening.”
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, commented on the situation, stating, “This is good news for Germany. Only with early elections can the Gordian knot in which this government has entangled itself be cut. A new government may be able to better address the new coordinates that have emerged from the elections in the USA than a traffic light coalition burdened by internal conflicts.”
Christian Zoller, a market expert at ING, echoed similar sentiments, warning that a prolonged period of governmental uncertainty would serve as poison to both the German economy and the stock markets. However, he also expressed hope that a new government could invigorate the DAX and potentially contribute to a robust year-end rally.
Yesterday, sentiment on the German stock market was markedly pessimistic, fueled by heightened fears of new trade barriers, with the DAX plummeting by 1.1 percent, settling at 19,039 points. Investors reacted sharply to Donald Trump’s announcement concerning punitive tariffs, which included a proposed 60 percent tariff on products from China and additional tariffs on items from Germany and other nations, leading to a decline of 1.4 percent in the EuroStoxx50 index.
Investors today are also closely monitoring the US Federal Reserve’s interest rate decision. Anticipated by most economists is an interest rate cut of 0.25 percentage points, potentially reducing rates to a range between 4.50 to 4.75 percent. There are indications that Trump’s election victory might not directly influence this immediate decision, although the potential long-term implications on US monetary policy remain a consideration.
“Lower corporate taxes and higher tariffs could significantly reshape US monetary policy,” noted Thomas Gitzel, chief economist at VP Bank. He elaborated that reduced tax rates may spur economic growth, while elevated tariffs could lead to increased inflation, potentially forcing the US Federal Reserve to reconsider its planned interest rate cuts.
Donald Trump’s electoral victory created a surge of euphoria among US investors, propelling Wall Street to new heights. The major US indices all experienced considerable gains, with the Dow Jones closing up by an impressive 3.6 percent at 43,729 points. Meanwhile, the technology-heavy Nasdaq surged three percent to reach 18,983 points, and the broad S&P 500 climbed by 2.5 percent, closing at 5,929 points.
While today’s trading session in the US may not replicate the frenetic pace of yesterday, indications suggest that investors are moderating rally exuberance. Nevertheless, US futures point toward the potential for further slight gains.
Ahead of the Federal Reserve’s interest rate decision, the euro has experienced a slight increase, recovering some of its sharp losses from the previous day. Following Trump’s election win, the euro had momentarily dipped below $1.07, marking its lowest level in approximately four months. As the day progresses, the foreign exchange market is becoming increasingly focused on monetary policy developments.
Rheinmetall is on track to achieve record profits amid a notable rise in arms spending from Western nations in the wake of the Russian invasion of Ukraine. Over a nine-month period, sales soared by 36 percent, totaling approximately 6.3 billion euros, while operating profit surged by 72 percent to reach 705 million euros, with order intake exceeding 21 billion euros and a total backlog amounting to around 52 billion euros.
According to a media report, Audi, the car manufacturer headquartered in Ingolstadt, is contemplating significant job cuts in the near future. It has been suggested that more than 2,000 roles in the development sector could be affected as the company seeks to streamline operations, as reported by “Manager Magazine.”
The proposed job cuts in the indirect sector aim to reduce headcount by approximately 15 percent, which equates to around 4,500 jobs in Germany alone. The Volkswagen subsidiary confirmed that discussions are currently underway with management representatives, although no specific figures regarding potentially affected positions have been disclosed.
The world’s largest reinsurer, Munich Re, reported significant losses attributed to natural disasters such as hurricanes, which surpassed the financial toll experienced during the same period last year. In the third quarter, reinsurance losses totaled 1.6 billion euros, with Hurricane Helene standing out as the most costly event in the US, incurring damages around half a billion euros. Overall, Munich Re posted total earnings of 930 million euros for the quarter, which marks a decrease of 20 percent compared to the prior year’s earnings.
Lanxess, a specialty chemicals firm, benefited from increased sales volumes and effective cost-saving measures, resulting in substantial year-on-year earnings growth. The company’s operating result (Ebitda), adjusted for special items, climbed by more than 45 percent, reaching 173 million euros in the third quarter, while sales figures nearly matched those from the same period last year at 1.598 billion euros, despite headwinds from lower sales prices.
In the first nine months of the year, Nordex, a manufacturer of wind turbines, reported a robust sales increase of 14 percent, bringing total revenue to 5.1 billion euros. The company’s Ebitda showed significant improvement, rising to 189 million euros, contrasting with a loss of 67 million euros the previous year. Ebitda margins also improved from 0.1 percent in the prior quarter to 4.3 percent in the latest quarter.
EV supply chain challenges
Though specific details remain under wraps. This news has understandably contributed to the overall unease in the market, particularly within the automotive sector, which is already grappling with numerous challenges, including supply chain disruptions and a shift towards electric vehicles.
In addition to these developments, the reinsurance sector is also feeling the heat. Munich Re has reported significant losses due to recent natural disasters and rising claims. Analysts are keeping a close watch on how these factors might influence reinsurance pricing and market stability moving forward. It’s a stark reminder that while some sectors thrive, others are left to navigate the turbulent waters of economic uncertainty.
But amid all the chaos, green energy solutions are shining bright. Nordex, a company focused on wind turbine manufacturing, has reported record sales, showcasing the growing demand for renewable energy sources in an era increasingly focused on sustainability. This sector might just be the silver lining in an otherwise cloudy economic forecast.
As the market continues to react to these variables, investors are urged to remain vigilant and brace for ongoing volatility. While today’s optimism in the DAX offers a glimpse of hope, it’s crucial to keep an eye on political shifts, trade tensions, and corporate earnings reports that will shape the financial landscape in the months ahead.
So, whether you lean towards cautious optimism or wary skepticism, strap in — it’s going to be a bumpy ride!
