Investors in flight mode: US bank shock causes DAX to stagger


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market report

Status: 03/10/2023 4:40 p.m

While the DAX plummets due to the turbulence at US banks, the losses on Wall Street are limited. At least there was no new bad news from the US job market.

At the end of the week, the DAX came under a lot of pressure due to the turbulence in the US banking sector. The leading German index collapsed by up to 2.0 percent to 15,316 points. The minus is currently around 1.6 percent.

Concerned about the banking system

The slide was triggered by a price slump at the Californian Silicon Valley Bank (SVB), which specializes in venture capital for the technology sector. The financial institution suffered losses of $1.8 billion after selling a bond portfolio. After pre-market losses of more than 60 percent, trading in the stock was initially halted. According to insiders, the company wants to put itself up for sale after failing to raise capital.

“German banks are now also being targeted by sellers because the start-up financier SVB Financial has revealed something that could also concern them: unrealized losses in the bond portfolio,” said analyst Jochen Stanzl from broker CMC Markets. The background is that many banks held bonds, the price of which had collapsed at an unprecedented rate.

What the market is now fearing is an implosion in banks’ balance sheets, said Stanzl. Investors would now be waiting for clarifications from the big financial institutions as to whether and to what extent the problems at SVB Financial also apply to them.

Crisis mode for European banks too?

The news about the venture capitalist “raised more questions than answers” among investors, wrote analyst Craig Erlam from broker Oanda. Some experts are now warning against simply transferring the problems of the US start-up financier SVB to the entire sector. For example, Joachim Klement, chief strategist at the investment bank Liberum Capital, does not believe that the SVB situation poses an immediate threat to the European banking system.

The US institute has a very special business model, specializing in venture capital and the financing of young growth companies. This is quite unique within the banking scene. Non-performing loans are likely to increase this year, but the reserves of banks in Europe and the US are sufficient to absorb any problems.

Hardly any help from the US labor market

The DAX receives little support from the USA. The US jobs report for February showed moderating wage growth, easing inflation worries and investors’ fears of further large rate hikes by the US Federal Reserve.

“The labor market is at least a little bit away from the peak of its strength,” said portfolio manager Thomas Altmann from the trading house QC Partners in a first reaction. “This is certainly not quite the report the Fed would have liked to see, but it’s definitely a step in the right direction.” In particular, the wages, which have risen so little in a month-to-month comparison as last twelve months ago, are pleasing.

Nevertheless, the US job situation is probably too robust to force the Fed to raise interest rates more moderately: “Even if the unemployment rate has risen, the Fed believes that the labor market is still not in balance,” write the Commerzbank experts in a short comment. “We expect further strong interest rate hikes, in particular a hike of 50 basis points in the week after next.”

Dow Jones slightly down

The turbulence surrounding the SVB, which has gotten into financial difficulties, has also hit the US stock exchanges. The Dow Jones index of standard values ​​lost half a percent to 32,092 points. The broader S&P 500 fell 0.8 percent to 3,885 points. The index of the technology exchange Nasdaq fell by 1.3 percent to 11,195 points.

Bitcoin falls below $20,000

The bad mood on the financial markets also affected numerous cryptocurrencies at the end of the week. Bitcoin falls below the $20,000 mark. The second-biggest cybercurrency, Ether, fell as low as $1,400 from around $1,500 the previous day. The day before, the crisis in the market for digital currencies had brought a heavyweight in the industry to its knees with the US financial group Silvergate Capital.

Deutsche Bank at the end of the DAX

The fear of a banking crisis is also spilling over to domestic institutes. The shares of Deutsche Bank and Commerzbank at the end of the DAX come together under the individual values. The stock exchanges fear that similar problems could also arise in Europe.

Profit-taking depresses Daimler Truck

Optimistic targets for the year gave Daimler Truck shares only a brief boost. Profit-taking pushes the papers down. The commercial vehicle manufacturer had announced that it would increase total sales to between 55 billion and 57 billion euros in 2023. Earnings before interest and taxes, adjusted for special effects, should increase “significantly”, i.e. at least 15 percent, compared to the previous year’s figure of 4.0 billion euros.

Headwind for Bayer supervisory board chairman

The fund company Union Investment is against a further term of office of Bayer supervisory board chairman Norbert Winkeljohann. “We will vote against the re-election of Mr. Winkeljohann,” said fund manager Janne Werning of “Wirtschaftswoche”. He was bothered by the numerous offices of the head of the supervisory board. The post is not a part-time job.

Union demands significantly better offer from Post

In the collective bargaining dispute at Deutsche Post, the ver.di union is keeping the pressure up and is threatening to go on strike next week. Ver.di and the Post want to return to the negotiating table today, and the fourth round of talks in Düsseldorf is likely to last until Saturday.

Mercedes wants to start building e-charging stations in 2023

The car manufacturer Mercedes-Benz has its own Plans for a dedicated charging network for electric cars finalized. The first fast charging stations are to be built in Germany and France this year, said Franz Reiner, CEO of Mercedes-Benz Mobility, to the dpa.

Schaeffler sells Russian business to Austrian Wolf

The Herzogenaurach-based automotive and industrial supplier Schaeffler is handing over its Russian business to the Austrian entrepreneur Siegfried Wolf. The company’s annual report states that on December 29, Schaeffler signed a contract to sell the Ulyanovsk plant to PromAvtoConsult; the purchase price is ten million euros.

Hypoport shocks with a view

The financial service provider Hypoport expects difficult times in the current year after a decline in business in the fourth quarter. Sales are likely to fall by up to ten percent in 2023. Hypoport even expects earnings before interest and taxes (EBIT) to fall by up to 30 percent.

Stratec down double digits to 2020 lows

Stratec shares collapse and fall to their lowest level since April 2020. After a decline in profits last year, the diagnostics specialist expects profitability to remain under pressure. Further rising costs and the introduction of a new generation of devices in veterinary medicine are likely to squeeze the operating margin again in 2023.

Meta flirting with Twitter alternative

Facebook parent Meta is exploring building a social network for text messages. This could become a direct competitor to text service Twitter, owned by Tesla CEO Elon Musk. “We are investigating a standalone decentralized social network for sharing text updates,” a Meta spokesman told Reuters in an email.

Another top manager leaves Credit Suisse

Credit Suisse has to say goodbye to another senior manager. Julian Gooding, who heads regulatory compliance, is leaving the second largest Swiss bank, two insiders told Reuters. The background to the departure is the far-reaching restructuring of the crisis-ridden institute.

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