DAX returns profits: Investors remain cautious


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market report

As of: 03/28/2023 4:38 p.m

The DAX cannot maintain initial gains in the afternoon and is struggling with its closing price. Even though the banking crisis has so far had little impact, the investment environment remains difficult.

On the German stock market, investors are acting more cautiously again in the afternoon. After the most important indices had risen quite significantly in the morning and thus tied in with the gains of the previous day, they came under pressure in the further course of trading and slipped into the red. The leading German index, which had risen to 15,261 at the daily high, is currently almost unchanged and was already slightly in the red at the low of 15,106 points.

The takeover of the collapsed Silicon Valley Bank by the US bank First Citizens Bancshares initially reassured investors, said market analyst Christian Henke from the trading house IG. “But the issue of the credit crunch could become an issue on the financial markets.”

The US government and the Federal Reserve held their protective hand over the banks, Henke stated. However, if smaller regional banks got into difficulties, this could have serious negative consequences for the economy, since they are responsible for lending. At least for the moment, the banking crisis is taking a back seat, said Thomas Altmann, portfolio manager at asset manager QC Partners. “However, it remains to be seen whether that will be enough for a longer recovery on the stock market.”

Environment remains difficult – real estate shares under pressure

A renewed slide in prices for real estate shares, which are currently suffering greatly from the unfavorable mix of rising interest rates and high inflation, is proving to be a particular burden. Higher interest rates make it more difficult to refinance real estate and reduce their future value from today’s perspective, which means that there is a risk of further depreciation.

There are plenty of representatives of the industry on the German price lists. DAX representative Vonovia is the weakest value at the end of the index. But especially in the MDAX, the shares in the industry are under heavy pressure. Especially commercial property specialist Aroundtown, which continues its recent slide, losing over 12 percent. LEG Immobilien and TAG Immobilien are also among the biggest losers.

The market is increasingly referring to Deutsche Bank’s commitment in the real estate sector, said a trader. The paper of the largest German private bank falls over two percent. The price drop at Deutsche Bank in the past week is also driving the banking supervision at the European Central Bank. “This is indeed a cause for concern,” ECB chief banking supervisor Andrea Enria said today at an event on banking supervision.

Chart technically no all-clear

Market technology also urges caution. Instead of overcoming the resistance at almost 15,300 points (last week’s high) and resuming the upward trend towards the high for the year, the DAX has bounced back down here. As a result, the prospects for the leading index will cloud over again in the short term.

Wall Street starts inconsistently

The mood on Wall Street is also rather subdued. The leading index Dow Jones is still slightly up in the early business, but the profits are crumbling. The Nasdaq technology exchange is down around half a percent.

According to market experts, given the recent turbulence in the banking sector, it is now apparent that the central banks are moving away from their “whatever-it-takes” policy in order to combat inflation. Although interest rate cuts are not yet to be expected this year, the markets are likely to increasingly price in an interest rate pause by the US Federal Reserve, it said.

US house prices fall

In the US real estate market, rising interest rates continue to weigh on price developments. In the 20 major metropolitan areas of the United States, house prices fell 0.4 percent in January from the previous month, according to the S&P/Case-Shiller Index, released in New York today. This means that prices have fallen for the seventh month in a row.

Walgreens above expectations

The US pharmacy chain Walgreens Boots Alliance from the leading index Dow Jones earned less in the second business quarter (as of the end of February) due to high legal and restructuring costs, among other things. Net profit fell by around a fifth to $703 million compared to the previous year. Adjusted earnings per share reached $1.16, down more than a quarter. However, this was above analysts’ expectations.

For the second half of the year, the company is assuming robust growth in earnings; the declining demand for services in connection with the corona pandemic should be more than offset by strong growth in the core business. The company confirmed its earnings guidance of adjusted earnings of $4.45 to $4.65 per share. Investors like the outlook, the paper rises over three percent.

Euro over $1.08, gold a little cheaper

On the foreign exchange market, the euro can post slight gains, currently 1.0821 dollars are paid for one euro. The upward trend of the European single currency since mid-March is still intact. The greenback is getting tailwind from a higher-than-expected US consumer confidence of 104.2 points, as the private research institute Conference Board announced. An ounce of gold costs 0.12 percent more at $1,961.

Oil prices slightly higher

Oil prices are little changed in the afternoon after the jump in prices the day before. This allows oil prices to continue recovering from the significant losses they have suffered in recent weeks. A barrel (159 liters) of North Sea Brent for delivery costs $78.11, 0.1 percent less.

Siemens Energy receives major order in Italy

The biggest DAX winner is still the Siemens Energy share. The energy technology group has landed a major order in Italy. A consortium of Siemens Energy and the Italian FATA group has been awarded the contract for the delivery of four converter stations by the transmission system operator Terna. The order volume for Siemens Energy is almost one billion euros.

Adidas and Beyoncé split

The sporting goods manufacturer Adidas is apparently about to end its collaboration with the US pop star Beyoncé. Several media in the USA and Germany had reported that the cooperation between the Franconian group and Beyoncé’s fashion brand Ivy Park should not be continued by mutual agreement after the contract expires at the end of the year. An Adidas spokeswoman initially did not want to comment on this.

Ivy Park’s products are said not to have been accepted by customers to the extent that Adidas had imagined. According to media reports, the Franks had to put money on it every year. For the DAX group, this is the second time in a short period of time that a cooperation with a major player in the music industry has had to be resolved. At the end of last year, the marriage of convenience with rapper Kanye West broke up. However, this was not for economic reasons – the product line was highly profitable. However, West had sidelined himself with anti-Semitic statements.

SpaceX rival Isar receives money from Porsche SE again

The German rocket manufacturer Isar Aerospace has one in a financing round another capital injection from Porsche SE receive. The major Volkswagen shareholder, together with venture capitalists and financial investors, has made a total of 155 million euros available. The SpaceX rival collected a total of 310 million euros.

Drug researcher Evotec in demand in the MDAX

In the MDAX, the Evotec share remains in demand in the afternoon. With numerous new collaborations behind him, the Hamburg-based pharmaceutical researcher is hoping for a better future. In 2023, the operating result should increase again after high costs had depressed the result last year.

Rational pays record dividend

The Bavarian commercial kitchen outfitter Rational paid more dividends for the past record year than ever before. The Board of Management and the Supervisory Board are proposing a distribution of EUR 13.50 per share, of which EUR 2.50 is a special dividend.

ProSiebenSat.1 buys TV rights for U21 European Championship

ProSiebenSat.1 has pulled off a coup in the competition for interesting sports rights. The broadcasting group has acquired an extensive package for the U21 European Championships from the European Football Union (UEFA). The company confirmed the contract of subsidiary Seven.One Sports with UEFA.

Musk wants to turn Twitter users into paying customers

Twitter owner Elon Musk is taking the next steps to get users to subscribe. From April 15th, only tweets from paying subscribers will appear in the “For you” area, where software contributions will be selected. After April 15, only paying subscribers will be able to take part in Twitter surveys.

US regulator files lawsuit against Binance

US financial regulators have filed a lawsuit against Binance – the operator of the world’s largest trading platform for digital currencies such as Bitcoin and Ether. The CFTC said the crypto exchange did not abide by the rules of the US financial market and operated certain transactions and services without the necessary authorization. Binance specifically tried to circumvent CFTC regulations. The supervisor wants to impose fines and a trading ban.

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