2024-03-08 15:15:00
market report
Investors are cautiously approaching the stock market following new US labor market data. Whether the rally from the previous day can continue will likely be decided in the followingnoon in New York.
Even following the publication of new US labor market data, investors remain cautious. After eventful days, there will be a little more calm at the end of the week. Inspired by new interest rate hopes following the interest rate meeting of the European Central Bank (ECB), the DAX had set a new record high the previous day at 17,879 points.
The index is currently struggling with yesterday’s closing price of 17,842 points and is thus keeping its sights on the new mark. The index has broken away from its daily low of 17,795 points, although fluctuations remain low overall. There is still no sign of major levies at the record high level. The MDAX of medium-sized stocks fell slightly by 0.2 percent.
The topic of the day today is the new February data from the US labor market, from which investors expect information regarding the further monetary policy of the US Federal Reserve (Fed). This showed that the market remained robust with 275,000 new jobs and was also above analysts’ expectations of 200,000 new jobs.
However, the values for the previous months have been revised significantly downwards. In addition, the increase in hourly wages was significantly lower than predicted at 0.1 percent. The separately determined unemployment rate also rose from 3.7 to 3.9 percent.
“Today’s report is only strong at first glance,” commented Thomas Altmann, portfolio manager at asset manager QC Partners. “The 275,000 newly created jobs are 75,000 more than investors and analysts expected. However, it should not be overlooked that the newly created jobs in December and January were revised downwards by a total of 167,000,” said the portfolio manager.
In addition, the increase in hourly wages was significantly lower than predicted at 0.1 percent, meaning that wage growth, which is considered a particular driver of inflation, is weakening. “Today’s labor market report contains nothing that might further postpone the first interest rate cut by the US Federal Reserve,” the expert continued.
US investors also seem to see no reason to say goodbye to the market based on the numbers. On the contrary, the decline in the increase in hourly wages in particular is keeping alive the interest rate fantasy that was rekindled by Fed Chairman Jerome Powell just the day before.
Investors are certain that the US Federal Reserve and the European Central Bank (ECB) will initiate a turnaround in interest rates this year. However, it is still unclear when this will happen. Recent statements from central bankers on both sides of the Atlantic have pointed to mid-year as the most likely point if inflation data continues to decline.
At the opening, the leading index Dow Jones is struggling with its closing price. The other indices that set new records yesterday are continuing their record run and slightly surpassing yesterday’s records in early trading. In the first few minutes of trading, the Nasdaq rose by around 0.6 percent to 16,378 points, the S&P 500 index gained almost 0.4 percent and has so far reached 5,181 points.
Shares in the pharmaceutical giant Eli Lilly fell once morest the trend at the opening on the NYSE by around 1.6 percent. The company may have to wait even longer for its Alzheimer’s drug with the active ingredient donanemab to be approved in the USA. The US drug regulator FDA is initially planning a hearing with external consultants, which will primarily focus on questions relating to the safety and effectiveness of the therapy.
The FDA’s decision is a big surprise for Lilly itself, because the authority was actually supposed to decide on approval in a few weeks. The group had expected a message from the drug authority by the end of the first quarter. The antibody donanemab was tested on patients with early-stage Alzheimer’s disease.
The active ingredient targets the protein amyloid in the patient’s brain, which is deposited there in the form of so-called plaques. Side effects such as brain swelling and bleeding occurred in the studies, so regular monitoring is necessary to detect such problems early. Similar side effects were also found in the Alzheimer’s drug from the Japanese manufacturer Eisai and the US partner Biogen, which was approved in July 2023. Biogen shares benefited from the Lilly news and climbed 3.9 percent.
The euro has turned positive once more in what has been a changeable trading experience and is currently trading at $1.0959, its highest level since the end of January. The European Central Bank (ECB) set the reference rate significantly lower at $1.0895 on Thursday followingnoon.
The euro recently benefited from a weaker US dollar, but also from its own strength: Because there are no signs of rapid interest rate cuts in the European currency area, the euro rate continued to rise. After the interest rate meeting in Frankfurt, ECB President Christine Lagarde signaled the possibility of the first monetary policy easing in June.
The Japanese yen made further gains. The market pointed to media reports suggesting a change in monetary policy in March. Accordingly, the central bank of Japan might say goodbye to its extremely loose monetary policy to some extent at its next meeting in just over a week. Several high-ranking representatives of the central bank had recently given hints in this direction, but without becoming concrete.
Oil prices under pressure – gold at record high
Oil prices have also turned negative due to the rising US dollar. The price for a barrel (159 liters) of North Sea Brent fell by 0.7 percent to $82.54 in the followingnoon.
The price of gold, however, extended its gains and surpassed yesterday’s record of $2,164. A troy ounce of the yellow precious metal costs a peak of $2,169, which is more than ever before.
At the end of the week, the focus on the German stock market is on HelloFresh shares. After the MDAX group cashed in on its medium-term targets yesterday, many investors are pulling the ripcord. The share price collapsed by more than 40 percent in the followingnoon. This marks the largest price loss in the company’s stock market history.
Analyst Emily Johnson from the British bank Barclays sees the cut targets for 2024 as a further disappointment following they had already rowed back for 2023 in November. According to Simon Baker of the major French bank Société Générale, the credibility of the group’s forecasts has been “seriously damaged”. After all, management emphasized not long ago that the problems were only temporary and would not have a major impact on 2024. Baker doubts that HelloFresh will be able to regain the trust of its investors in the near future.
The continued warning strikes by ground staff are also causing numerous flight cancellations at Lufthansa today. Once once more, only 10 to 20 percent of the originally planned flights will take place, said a company spokesman. This means that around 1,000 flights will be canceled once more, especially at the Munich and Frankfurt hubs.
Apple wants to make the switch from an iPhone to an Android smartphone more user-friendly in the EU next year. The group announced this as part of the implementation of the requirements of the DMA (Digital Markets Act). A corresponding solution should be available in autumn 2025.
High demand for semiconductors as a result of the AI boom has brought US chipmaker Broadcom earnings above expectations. In the first quarter, the company posted adjusted profit of $5.25 billion on revenue of $11.96 billion. The tech company benefited from high demand for its network chips. However, investors are taking profits and the shares are falling over three percent in New York.
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