Market report: DAX gains momentum

It’s no fireworks in the stock market – but Germany’s leading index is at least slightly positive. Tailwind hails from, of all places, Japan, as well as New York.

The DAX is gaining momentum again in the afternoon with a friendly Wall Street behind it and is currently holding close to its daily high of 16,733 points. The index increased by almost half a percent. The MDAX of mid-sized companies even strengthened by 0.7 percent to 27,096 points.

Overall, hopes of interest rate cuts in the US and the Eurozone next year are keeping prices high. Market-moving economic data is off the agenda today, so prospects for a solid trading day are good.

Support for interest rate bullies is now coming from Japan, of all places, which doesn’t happen every day. The Bank of Japan (BoJ), the only major Western central bank to reject any interest rate hike, is sticking to its already very loose monetary policy for now.

After today’s decision on interest rates, the head of the central bank, Kazuo Ueda, expressed optimism that inflation could move towards the two percent required by the monetary authorities: “But we still have to check whether there will be a positive wage-inflation cycle.” The central bank wants to look at more data.

Around 80 percent of Japanese economists expect an end to negative interest rate policy next year, but the fact that cheap central bank money continues to flow into the world’s third-largest economy has been well received in the stock market. With the Bank of Japan sticking to its negative interest rate policy, investors breathed a sigh of relief. The BoJ’s dovish stance supports overall stock market sentiment, said Fiona Cincotta, market analyst at City Index.

Japan’s leading Nikkei index closed 1.4 percent higher at 33,219 points in the morning. The broader Topix index rose 0.3 percent to 2,324 points.

In New York, major stock indexes are slightly higher. The leading Dow Jones index set a new record at 37,457 points, the Nasdaq 100 index rose to 16,781 points, which is also a new record. On Wall Street, the Dow Jones index reached another high of 37,393 points in the eveningbut then closed just 0.1 percent higher at 37,326 points.

This means that the indices remain at their record highs, which means that there are still possible positive surprises. “The rally in US equity markets continues,” wrote Deutsche Bank analyst Jim Reid.

Analysts at the British bank HSBC recently suggested that the Dow would reach 40,000 points. In the remaining trading days of 2023, the main question is likely to be whether investors will “cash in” and take price gains before the end of the year.

Hopes of a US interest rate cut continue to support the euro against the dollar. In the afternoon, the European common currency continued to expand its advances towards $1.10 to $1.0966.

Prices are also rising on the raw materials market. A barrel of Brent North Sea crude is now about 0.9 percent higher at $78.71. Gold is currently trading around 0.2 percent higher at $2,031 per troy ounce.

Inflation figures from the Eurozone also contribute to the good mood today. Price growth in the eurozone is falling noticeably, bringing the European Central Bank (ECB) closer to its inflation target. Consumer prices rose by only 2.4 percent in November compared to the same month last year, as Eurostat confirmed in its first estimate. This means that the ECB’s medium-term objective of an inflation rate of 2.0 percent is increasingly within reach.

From the perspective of Francois Villeroy de Galhau, head of the French central bank, the ECB should cut interest rates sometime in 2024. The ECB kept them constant at its last monetary policy meeting of the year last week.

The share of medical technology specialist Sartorius topped the leading German index, gaining more than three percent. Private bank Berenberg recommended buying the share with a price target of 300 euros. Conversations with CEO Joachim Kreuzburg at an investor event showed positive order trends at the lab and pharmaceutical supplier are likely to continue, analyst Odysseas Manesiotis said in a note.

According to a media report, oil company Adnoc from the Emirate of Abu Dhabi is increasing its takeover bid for the plastics company based in Leverkusen. Adnoc now wants to offer 60 euros per Covestro share, financial news agency Bloomberg reports, citing insiders. The oil giant wants to submit the offer in the coming days. Adnoc also wants to guarantee job guarantees for several years and investments of around eight billion dollars. Covestro shares gained two percent.

After summer’s costly storms, Allianz transfers its own risks to capital market investors. To this end, the company launched a catastrophe bond for windstorm risks in Europe through an Irish special vehicle. According to its own information, Allianz secured risks worth 250 million euros on the capital market for the years 2024 to 2026. Investors would receive the bond well. Damages from natural disasters cost Allianz nearly 1.3 billion euros in the third quarter – almost four times more than a year earlier.

By contrast, Bayer shares fell 1.7 percent after a US ruling against its Monsanto subsidiary, sending it to the bottom of the DAX. A US court has ordered Monsanto to pay $857 million to former students and parent representatives at a school northeast of Seattle. They claimed that the chemical PCB produced by Monsanto caused them health problems.

Lufthansa is adapting its fleet for the future and ordering 80 short- and medium-haul aircraft. Germany’s largest airline announced today that it has ordered 40 737-8 MAX aircraft from the US manufacturer Boeing and secured options for another 60 aircraft.

Lufthansa chief Carsten Spohr called it a “good strategic decision” to order Boeing 737s for the first time since 1995. The group also ordered 40 A220-300s for Lufthansa City Airlines from European manufacturer Airbus and secured 20 purchase options. There are also options to purchase 40 aircraft from the Airbus A320 family. The machines are to be delivered between 2026 and 2032.

“With today’s aircraft order, we are accelerating the largest fleet modernization in our company’s history,” said Detlef Kayser, Board Member for Fleet and Technology. The order list of approximately 200 aircraft increases to 280 plus 120 purchase options. According to information, the new planes are more comfortable, quieter, more economical and more efficient. The machines emitted up to 30 percent less CO2 than their predecessors.

Thyssenkrupp Nucera shares are the leaders of the SDAX small cap index with a gain of eleven percent. According to its own information, the group wants to benefit from the growing global demand for climate-neutral hydrogen in the coming years. Germany and six other European countries have agreed to ban all CO2-emitting power plants from their power grids by 2035, according to a report in Handelsblatt.

Stock market newcomer Schott Pharma earned more in its latest financial year despite a reduction in customer stock. According to its own statements, the Mainz company benefited mainly from the expansion of its production capacity for high-margin products, including new production lines for prefilled polymer syringes. Sales rose nine percent to 899 million euros in the twelve months to the end of September compared to the previous year. Earnings before taxes, interest, depreciation and amortization (Ebitda) also increased by nine percent to 239 million euros.

After lawsuits from several US states, Alphabet subsidiary Google has settled with Google over its practices with the Play Store app. Antitrust authorities agreed to pay $700 million. Under the agreement, Google will pay $630 million into a consumer fund and $70 million into a US state fund. States have accused Google of overcharging consumers through illegal restrictions on the distribution of apps on Android devices and unnecessary transaction fees.

Apple will suspend sales of new models of its computer watch in the US after losing a patent case. Apple Watch Series 9 and Apple Watch Ultra 2 will no longer be sold on the company’s US website starting December 21st, and will not be sold in US stores after December 24th. Medical technology company Masimo is accusing Apple of using its patented technology to measure blood oxygen levels in its watches without a license.

Leave a Comment