Concerns about Credit Suisse: DAX falls below 15,000 points


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market report

As of: 03/15/2023 6:09 p.m

After the upheavals surrounding the SVB bankruptcy, the markets are very nervous. Today, a spark was enough to trigger another wave of selling. Wall Street is also trending weak at the moment.

In late trading, the price losses on the German market widened again. The DAX ended the day 3.27 percent lower after having already passed the round mark of 15,000 points in the morning. Even if experts continue to see no extension of the bankruptcy of the Californian SVB into a larger banking crisis, this time shock waves emanated from a major European bank.

Because the major shareholder of the troubled Credit Suisse, the Saudi National Bank, on demand categorically ruled out additional support from the Swiss institute, the CS share in Zurich fell to a record low at times. However, the question asked by “Bloomberg TV” was purely hypothetical, and the head of the National Bank also stated that Credit Suisse did not need any additional capital.

Nevertheless, the uncertainty in the run-up to tomorrow’s interest rate decision by the European Central Bank (ECB) increased significantly again. Observers continue to expect a rate hike by the ECB of 50 basis points. Analyst Konstantin Oldenburger from the trading house CMC Markets raised the question of how the ECB would communicate its future monetary policy to a financial market “which is under a lot of stress due to the first major bank collapses in the USA since Lehman Brothers. Investors will listen very carefully here”.

IfW and ifo present economic forecasts

The Institute for the World Economy (IfW) in Kiel does not anticipate a strong upswing in Germany due to persistent losses in purchasing power among consumers as a result of persistently high inflation. The economic researchers raised their growth forecast for 2023, but only from 0.3 to 0.5 percent. For comparison: the federal government has so far assumed only 0.2 percent. The forecast for 2024 was also raised – from the 1.3 percent expected in winter to 1.4 percent now.

The ifo Institute, on the other hand, expects economic growth to decline by 0.1 percent. The Munich economic researchers thus confirm their forecast from last December. For 2024, the economic expectations for Germany have been raised slightly. The ifo Institute is now assuming growth of 1.7 percent in the coming year. That is 0.1 percentage points more than the forecast in December.

Wall Street also weak

Investors on Wall Street are also taking the news from Credit Suisse as an opportunity to exit the nervous market. At the moment, the Dow Jones is down more than two percent.

As for the US Federal Reserve’s (Fed) interest rate decision due on March 22, there is a growing proportion of those who expect interest rate hikes to be suspended in the face of the SVB collapse. According to the Chicago CME’s Fed Watch Tool, more than 58 percent of market participants currently expect such a move. At least the latest retail data hasn’t increased the Fed’s pressure to act. After a good start to the year, US retail sales fell 0.4 percent in February. Economists had expected a slight decline.

Euro weaker again

In the meantime, the euro has also slid sharply downwards on the foreign exchange market – the fact that the focus is now also on a troubled European bank, Credit Suisse, increases demand for the supposedly safe haven dollar. The European single currency is currently trading at $1.0540.

Oil prices further down

Oil prices are being weighed down for the third day in a row by the gloomier economic outlook given the turbulence in the banking market. Brent crude oil from the North Sea lost more than six percent to prices around $71.80 per barrel (159 liters) by the early evening. Economic data from China was still supported in the morning. Economic activity in the world’s second largest economy showed further signs of recovery in the first two months of the year.

Deutsche Bank loses over nine percent

As expected, bank stocks were at the top of sell lists given the Credit Suisse news. Deutsche Bank and Commerzbank were again at the bottom of the DAX with heavy losses.

E.ON at the top of the DAX

E.ON stock bucked the trend with a slight gain. After a better than expected year, Germany’s largest energy supplier wants to spend even more money on its energy networks. By 2027, investments are to be increased by around six billion euros to a total of 33 billion euros. For the current year, the Executive Board expects adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of between 7.8 and 8 billion euros. E.ON expects adjusted net income to be between EUR 2.3 billion and EUR 2.5 billion.

T-Mobile US buys low-cost operator Mint Mobile

The American Telekom subsidiary T-Mobile US takes over the low-cost provider Mint Mobile for up to 1.35 billion dollars (1.26 billion euros). 61 percent of the sum is to be paid in shares, the rest in cash. The exact takeover price depends on how the business will develop within certain time frames after the takeover. The acquisition should not change anything about the annual outlook for T-Mobile US, it said. T-Mobile boss Mike Sievert wants to put a little more on the table than “Manager Magazin” reported at the end of January. There was talk of up to one billion US dollars. Mint Mobile has been part-owned by Canadian actor Ryan Reynolds since 2019 and is aimed at particularly price-sensitive customers.

BMW relies on electric cars

BMW is preparing for growth in the current year. Sales should increase slightly overall and prices should remain stable, according to the Munich carmaker. A significantly higher demand for electric cars was already noticeable in the first two months, especially from China. Well before 2030, more than half of all BMW cars sold could have a fully electric drive, and by 2023 it should be 15 percent.

K+S expects business to calm down

After the explosion in potash prices and a record year in 2022, the boom at the fertilizer and salt manufacturer K+S has come to an end for the time being. Potash prices have now normalized significantly after overheating last spring, said CEO Burkhard Lohr at the presentation of the balance sheet. Sales should therefore fall in 2023 and earnings before interest, taxes, depreciation and amortization (Ebitda) should drop to between 1.3 and 1.5 billion euros. Last year, Ebitda more than doubled to 2.4 billion euros thanks to the significant increase in potash prices. Sales climbed 77 percent to 5.7 billion euros.

Lufthansa recommended

The Lufthansa share fared better than the market as a whole. The major Swiss bank UBS has upgraded the MDAX title from “neutral” to “buy” and raised the price target from 9.30 to 13.25 euros. According to a study published yesterday evening, analyst Jarrod Castle expects air traffic and profitability to continue to recover.

Lanxess disappointed

On the other hand, investors turned their backs on the chemicals group Lanxess from the MDAX after a disappointing outlook for the first quarter. For the first quarter, Lanxess expects adjusted earnings to drop to between EUR 180 million and EUR 220 million in view of the persistently high energy prices. This means that the group is below expectations, said a dealer.

Decline in profits at Apple suppliers

The strict corona measures in China have depressed the profit of the Taiwanese Apple supplier Foxconn in the fourth quarter. The bottom line is that the company earned 40 billion Taiwan dollars (1.22 billion euros), ten percent less than in the same period last year. Production of iPhones was halted ahead of Christmas and the Chinese New Year in January after thousands of workers were forced to leave Foxconn’s factories in Zhengzhou, China, due to the pandemic.

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