market report
Status: 02/24/2023 10:13 p.m
Wall Street showed its turbulent side today: Fresh US inflation data exacerbated concerns regarding tighter monetary policy. Both the DAX and the Dow Jones closed the week with losses.
Fear of further significant rate hikes by the US Federal Reserve has spooked investors on Wall Street. The Dow Jones dropped 1.02 percent to 32,816.92 points. On a weekly basis, the minus is around three percent. The broad S&P 500 lost 1.05 percent to 3970 points.
The Nasdaq 100 technology index fell 1.7 percent to 11,969.65 points. It fell below the 12,000 point mark for the first time since February. Technology stocks usually react even more strongly to central bank interest rates than so-called standard stocks.
Sharper rate hike feared
Current US inflation data was the signal for investors to sell. The PCE inflation measure, which is the focus of particular attention from the US Federal Reserve, rose by 5.4 percent in January over the year. This was not only clearer than in the previous month, but was also above market expectations. The core index excluding energy and food also rose more than the previous month by 4.7 percent.
Investors are now concerned that with persistently high inflation, the Fed may tighten further in a bid to contain inflation. Analyst Phil Blancato of Ladenburg Thalmann Asset Management believes that a 0.50 percentage point hike in interest rates in March is now likely. At the beginning of February, the central bankers only increased the key rate by 0.25 percentage points.
This is also indicated by a statement by the US Federal Reserve Banker Loretta Mester. The data “is another indication that the inflationary stimulus and price pressures continue to be with us,” said the head of the Cleveland branch of the Fed. The US Federal Reserve will have to do more to bring inflation on a sustainable path to the 2% target.
“Inflation the toughest opponent on the stock market”
Konstantin Oldenburger, an expert at CMC Markets, agrees that the indicator sends a clear signal to the Fed to reconsider the recently slowed pace of its rate hikes. “You can twist and turn the tide as you like, inflation remains high and is therefore probably the toughest opponent for the stock market at the moment,” Oldenburger continued.
According to market observer Andreas Lipkow, inflation and interest rate policy have been massively underestimated by market participants in recent weeks.
Update economy from 02/24/2023
Klaus-Rainer Jackisch, HR, February 24, 2023 09:49 a.m
DAX loses 1.8 percent on a weekly basis
The DAX had previously closed down 1.7 percent at 15,209.74 points. He lost almost 1.8 percent in this stock market week. At first it looked as if the leading German index would close the week on a conciliatory note, marking a daily high of 15,530 points. But the fresh US inflation data drove investors out of the stock market.
A surprisingly sharp decline in economic output had previously worried investors. Gross domestic product shrank by 0.4 percent in the fourth quarter of 2022 compared to the previous quarter. “All in all, the figures show that the sharp increase in energy prices has slowed down the economy noticeably, despite the extensive government aid measures,” wrote analyst Ralph Solveen from Commerzbank.
Oil prices fluctuating at the end of the week
After volatile trading, oil prices were recently up once more. According to Commerzbank commodities experts, the recent ups and downs on the oil market are determined by two other issues in addition to the strength of the dollar: the recovery in Chinese oil demand and Russia’s supply. According to an analysis by Commerzbank, there have recently been indications from Russia that the supply shortages are limited.
Ericsson is cutting 8,500 jobs worldwide
The Swedish network supplier Ericsson plans to cut 8,500 jobs worldwide. The job cuts are part of the austerity program that the group announced last December, as a company spokeswoman told the German Press Agency. Ericsson wants to reduce its costs by the equivalent of around 814 million euros by the end of the year. The company plans to make most of the layoffs in the first half of 2023. According to Ericsson, it employs around 105,000 people worldwide.
BASF shares collapse
The BASF share is the biggest loser in the DAX. The chemical giant wants to respond to high energy prices and poor business prospects with tough cuts. 2,600 jobs will fall victim to the austerity measures worldwide, almost two-thirds of them in Germany. Several energy-intensive plants in Ludwigshafen are to be closed, including one of the two ammonia plants and the associated fertilizer plants.
Audi plans electric car factory in the USA
Audi plans to build an electric car factory in the United States. “With the US government’s Inflation Reduction Act, the construction of a US plant for electric cars has of course become very attractive,” said Audi boss Marcus Duesmann of the “Frankfurter Allgemeine Sonntagszeitung” according to the preliminary report. It is unclear whether Audi will build its own plant or within the Volkswagen group. Both are possible, a joint work with VW is likely.
Court dismisses climate lawsuit brought by organic farmer once morest VW
The Detmold regional court has dismissed the climate lawsuit brought by an organic farmer once morest the Volkswagen Group. The lawsuit was unfounded overall, the court said. The farmer Ulf Allhoff-Cramer, who is supported by the environmental protection organization Greenpeace, wanted to force VW to severely restrict the production of cars and light commercial vehicles with combustion engines in the coming years and to stop them completely in 2030.
Hedge funds are targeting Nagarro
After a critical magazine report and growing pressure from hedge funds, investors in Nagarro took to their heels. The shares of the Munich software developer collapsed by up to 17 percent. After mandatory publications in the Federal Gazette, the hedge fund SIH Partners has expanded its bets on a fall in the price; he now holds short positions of 2.64 percent of the shares. The asset manager Kairos has also recently expanded its so-called short positions. In total, four hedge funds are betting on a price decline on a larger scale.
In a report, the “Wirtschaftswoche” pointed out, among other things, the low sales per employee compared to the competition. In addition, sales are growing while cash inflows are declining. In return, receivables from customers who have not yet paid or have not yet received an invoice are increasing.
1&1 in the red because of a clinch with Vodafone
The papers of the mobile phone subsidiary of United Internet, 1&1, lost heavily today. Stockbrokers justify the weak trading with the dispute with the competitor Vodafone. 1&1 sees itself hindered by Vodafone in the expansion of its 5G mobile network and therefore wants to file a complaint with the Federal Cartel Office.
Building materials group Saint-Gobain inspires with record sales
Saint-Gobain pleases investors with record sales and strong growth in all regions. The shares of the building materials group rise in Paris by up to 5.9 percent to 56.49 euros. They have thus reached their highest level in almost nine months. Sales grew last year by almost 16 percent to 51.2 billion euros, more than analysts had expected.
Shareholders will probably get nothing from the Cineworld insolvency
The shareholders are likely to get nothing from the insolvency of the British cinema chain Cineworld. A number of possible buyers have signaled an interest in parts of the operational business or in all cinemas, but nobody wants to take over Cineworld itself, said the world number two behind the US American AMC Entertainment.
Deliveries of Boeing Dreamliners stopped once more
The US aircraft manufacturer Boeing has once more had to stop deliveries of its long-haul aircraft 787 Dreamliner. The reason for this are problems with part of the aircraft fuselage, the US Federal Aviation Administration announced yesterday. The group must now carry out “additional analysis” for this part. Deliveries of the Dreamliner may not begin once more until the FAA believes the problem has been “satisfactorily” resolved.
IAG takes over airline Air Europa completely
The aviation group IAG takes over the Spanish airline Air Europa completely. The parent company of the airlines British Airways, Iberia, Vueling, Aer Lingus and Level am has reached an agreement with the owner of Air Europa, the Spanish group Grupo Globalia, to take over the remaining 80 percent of the airline’s capital for 400 million euros Evening in Madrid with.
Holcim gets new boss following record result
The Swiss cement company Holcim gets a new boss. Group CEO Jan Jenisch is to be elected Chairman of the Board of Directors at the Annual General Meeting in May. The world market leader closed the past year with record sales and operating results. The bottom line is that net profit increased by 44 percent to 3.31 billion francs.
