market report
Status: 11/28/2022 4:05 p.m
After a long period of abstinence, the stock market has once again focused on the situation in China. Investors are taking the protest wave there as an opportunity to take their latest profits with them.
For a long time, China was no longer one of the major influencing factors on the German stock market. At the beginning of the new week, investors focused on China again. The biggest wave of protests in decades against the state’s strict zero-Covid policy measures fuels concerns about further economic losses in the world’s second largest economy.
The DAX continued to come under pressure during the course of the day and is currently losing more than 0.9 percent. In view of the recent strong price rally in the DAX, however, it is not particularly surprising that some investors are using the developments in China to take some profits. From a seasonal point of view, too, a pause after the November rally, which can often be observed, is not untypical.
Only on Friday did the DAX mark its highest level in five months at 14,572 points, and the leading German index had gained almost 23 percent since its low at the end of September. Market observers spoke of an “overbought” situation in the DAX.
US recession leading indicator strikes
Meanwhile, investors are also worried about the US bond market. The interest rate differential between ten-year and two-year US bonds, at minus 80 basis points, was recently more negative than it had been since the early 1980s. In such a case, experts speak of an inverse yield curve. This is considered a reliable early indicator of a US recession.
Wall Street opens at a discount
Wall Street also went downhill at the beginning of the week against the background of developments in China. The leading US index, the Dow Jones, is down 0.4 percent half an hour after the start of trading. The technology stocks on the Nasdaq lose around 0.2 percent.
Wave of protests in China causes oil prices to fall
Oil prices fell sharply at the beginning of the week, picking up on last week’s losses. At the start of the week, concerns about further developments in China put pressure on prices, market observers said. A barrel (159 liters) of North Sea Brent costs US$ 81.29 in the early afternoon. That is three percent less than on Friday.
Euro moves towards 1.05 dollar mark
The euro continued to expand its gains against the dollar during the course of trading. In the early afternoon, one euro costs 1.0440 dollars. The fact that the euro is able to gain so significantly despite investors’ growing risk aversion is a clear sign of strength.
Market observers attribute this to the interest rate gap between Europe and the USA, which is gradually closing again. Investors on the futures markets are assuming that the Fed will be less aggressive than the ECB in the coming months.
Fresenius shares in demand
One of the few DAX winners is the Fresenius share, which benefits from a buy recommendation from UBS. Analyst Graham Doyle emphasized that the medical group’s annual earnings growth is associated with fewer risks than the equivalent growth of other sector companies. Doyle therefore complained about the 70 percent discount at which the stock is traded. The paper is cheap in every respect.
Brenntag share in sell-off
By far the biggest loser in the DAX is the Brenntag share, which fell by more than eight percent. The chemicals trader’s papers are suffering from management’s takeover talks with US rival Univar Solutions. Analysts see light and shadow. Such a deal could release synergies, but the question of the purchase price is still open.
A merger could create a company with sales in excess of $30 billion. Univar shares were trading significantly higher on the Tradegate trading platform.
Possible delivery delays at Airbus
With a price drop of around five percent, the Airbus share is the second-biggest loser in the DAX. According to insiders, Airbus is currently preparing customers for delays in the planned deliveries of some medium-haul aircraft. The background is uncertainties about the delivery of engines and other parts for the machines, and there is also a possible staff shortage. Airbus did not comment on the information.
VW stops production at a Chinese plant
Due to the corona-related restrictions in China, Volkswagen has stopped the assembly lines in one plant and is producing less elsewhere. “Production at the Chengdu plant has been temporarily stopped in connection with the current corona wave,” a spokesman said today when asked by the Archyde.com news agency. Two production lines at the Changchun plant are also affected.
BMW expects stable business in 2023
BMW CEO Oliver Zipse expects stable business in the coming year. There are different challenges and opportunities in the different world markets. The lockdowns in China, the largest car market, worried him, said Zipse. There should be enough gas in Germany this winter, but the car industry and its suppliers need a secure energy supply at competitive prices.
Adler Group share jumps up
Adler Group shares are on the up. The badly hit real estate group has reached an agreement with a core group of creditors to adjust the terms of the bonds issued by Adler. For the first time since the end of August, the price approached the 3 euro mark again.
Barclays boss undergoes cancer treatment
The boss of the British bank Barclays, CS Venkatakrishnan, has to be treated for cancer. Venkatakrishnan will soon be working from home, the money house said. The treatment should last 12 to 16 weeks. “The company will operate normally during this time and I will remain actively involved in its management,” the bank chief said. The institute confirmed that no interim CEO had been appointed.