market report
Status: 07/18/2022 10:12 p.m
In the end, Wall Street’s strength dwindled following all. The uncertainties before the interest rate meetings of the major central banks are too great. There was still a clear plus on the German market.
That’s it for the rest. After an initial plus of more than one percent, the Dow Jones had to pay tribute to the difficult environment and eventually even drifted into the red. At the close of trading, the leading index was 0.7 percent lower. Thanks to robust economic data, the Dow Jones ended a five-day losing streak on Friday and almost made up for its weekly minus.
Recently, several leading US central bankers had expressed skepticism regarding a possible interest rate hike by a full percentage point. The majority of market participants are now expecting another rate hike of “only” 75 basis points from next week’s Fed meeting. Nevertheless, the scenario of sharply rising interest rates remains intact, which also caused technology stocks to fall back once more. The Nasdaq 100 technology index closed 0.9 percent lower.
DAX remains in positive territory
The German stock market was able to build on its recovery from Friday. But investors didn’t want to lean too far out of the window here either: After the DAX had temporarily increased by up to 1.5 percent to 13,062 points, it ended up with a much more modest increase of 0.74 percent.
In the currently difficult environment, the market players initially seemed willing to accept higher risks once more. This so-called “risk on” positioning was also evident in the oil and crypto markets. “Safe havens” like the US dollar lost out.
Excitement before Thursday
Before the interest rate decision by the ECB on Thursday, nervousness might increase once more. The fact that the European Central Bank will raise the key interest rate by at least 25 basis points at its Council meeting for the first time in nine years is a given. There are uncertainties regarding the new anti-fragmentation instrument that the central bank wants to present on Thursday. The ECB wants to combat the widening of the yield differentials between the government bonds of the various countries in the euro zone.
But on Thursday not only the ECB meeting will take place, The maintenance work on the Nord Stream 1 pipeline is also scheduled to end on this day. Unless gas flows resume, the bear market rally in the euro and European stocks might fizzle out along with pipeline flows, warned Jeffrey Halley, an analyst at forex broker Oanda.
Should Russia cut gas supplies in retaliation for Western sanctions, it would plunge Germany and the rest of Europe into recession, economists believe.
Euro continues to make up ground
The safe haven US dollar was not sought following at the beginning of the week. The greenback fell once morest major currencies such as the yen and Swiss franc. At the same time, the euro rose by 0.5 percent to $ 1.0150 by the evening. The $1.00 mark is currently acting as an important support for the euro, emphasizes market expert Robert Rethfeld. However, investors remain nervous regarding the uncertain future of the Nord Stream 1 pipeline.
Oil prices continue to rise
Oil prices continue to rise. The price of Brent from the North Sea rose to $105.65 per barrel by late evening. In addition to the waning risk aversion of investors, Chinese central bank head Yi Gang’s commitment to additional economic stimulus fueled demand. In addition, the weaker dollar makes oil cheaper for buyers outside the dollar area and thus supports the price of “black gold”.
Gold misses recovery
Gold prices failed to hold initial gains. The price of a troy ounce remained close to its Friday level at $1,708 in the evening. In the past week, the yellow precious metal has temporarily slipped below the $ 1700 mark. In the six-month perspective, the minus amounts to around six percent.
Goldman Sachs asked despite slump in profits
Goldman Sachs’ balance sheet in particular boosted the start of trading on Wall Street. The investment bank earned $2.9 billion in the second quarter, down 47 percent from a year ago. The slump in investment banking and higher loan provisions contrasted with a booming securities trading business. Goldman CEO David Solomon spoke of “solid results”. Analysts had expected significantly weaker numbers on average. Goldman Sachs also announced an increase in its quarterly dividend from $2.00 to $2.50 per share.
Bank of America groans under costs
A positive interpretation also prevailed in the figures from Bank of America. Here, higher reserves for bad loans and legal costs caused profits to fall 33 percent year-on-year to $6.2 billion. Revenues rose 6 percent to $22.7 billion. However, strong growth in some business areas such as securities trading might not offset higher costs.
GM wants to return to Europe with electric cars
General Motors wants to return to the European market with e-cars on a grand scale, which it left in 2017 with the sale of Opel. “All I can tell you is that it’s a huge growth opportunity for the company and we’re thrilled to be back,” GM CEO Mary Barra told the AP. The CEO reiterated her goal of selling more electric vehicles in the US than current market leader Tesla by the middle of this decade. GM sold 25,000 electric cars in the US last year, Tesla 325,000.
Uniper draws a billion-euro credit line from KfW
The supplier Uniper, which has been hit by the gas crisis, is using a multi-billion dollar loan from the state-owned development bank KfW. “Today, Uniper drew on the existing KfW credit facility in the amount of two billion euros and thus fully utilized the facility,” the group announced. According to a Uniper spokesman, how long the funds will last depends on the further development of the gas market.
Belts in the BMW plant in Dingolfing stand still
Damage to the overhead line on the railway paralyzed production at the largest European BMW plant in Dingolfing. Today both early and late shifts were canceled in both assembly halls, as a spokesman said. Several thousand employees were affected, and around 1,600 cars might not initially be built. Because of the damage to the overhead line, finished cars cannot be removed from Dingolfing. BMW simply does not have the space for further production.
VW asked regarding Porsche plans
In the medium term, the VW Group no longer sees cars with combustion engines as a cost-effective alternative to electric cars. The new head of the Volkswagen brand, Thomas Schäfer, expects vehicle prices to rise significantly as a result of the planned EU emissions standard Euro 7. Combustion vehicles would each be 3,000 to 5,000 euros more expensive due to the more complex emission control system, he told the “Welt am Sonntag”. However, the DAX title was in demand today because of the return targets of its sports car subsidiary Porsche AG (not to be confused with the group holding company Porsche SE). Porsche AG, which is scheduled to go public once more this year, wants to significantly increase its profitability in the coming years and is aiming for an operating result of 20 percent of sales in the long term. Last year the margin was an above-average 16 percent. In the medium term, Porsche wants to increase sales by an average of seven to eight percent per year over the coming years and achieve a margin of 17 to 19 percent.
Airbus and Boeing are fighting for new orders
Starting today, manufacturers such as Airbus and Boeing are presenting in Farnborough, UK southwest of London their products and vie for orders. At the first major aviation trade fair since the corona pandemic, experts are not expecting quite as large a firework of orders as before the crisis. Farnborough might show how the US company Boeing, which has been shaken by many problems, is doing compared to the world’s largest aircraft manufacturer Airbus from Europe. At the start of the fair, aircraft manufacturers and airlines tried to underpin their efforts to combat climate change with new agreements.
Stellantis calls off Jeep joint venture in China
The car group Stellantis has called off the planned majority takeover of a Chinese joint venture for local Jeep production. Because the project did not progress, the Opel parent company ended the joint venture with the Chinese partner GAC and only wants to import the Jeep brand into the People’s Republic in the future. The step will burden the Stellantis balance sheet for the first half of the year with around 297 million euros in special costs.
H&M ends business in Russia
The fashion group Hennes & Mauritz (H&M) withdraws from Russia. In the current situation, she sees it as “impossible” to continue the business in Russia, said H&M boss Helena Helmersson. Management expects the entire settlement process to incur one-off costs of around 2 billion Swedish kroner (190 million euros).
Poor Haleon IPO
Haleon’s IPO was a painful experience for owners of the Voltaren ointment maker. Shares hovered around their opening price of 330 pence in London. The consumer goods division of the pharmaceutical company GlaxoSmithKline was valued at a total of 36.5 billion euros. Analysts had credited Haleon with a market value of up to 56.5 billion euros.
