Dusseldorf For the first time in the stock market year, the German stock market felt a clear headwind on Friday due to fresh figures from industrial production in Germany and from the US labor market. Nevertheless, the leading index Dax stayed at the previous day’s level in the first hour of trading. Most recently, the Frankfurt stock exchange barometer was slightly weaker at 14,430 points. The previous day it had ended 0.4 percent weaker.
If the Dax still climbs above the 14,500 point mark, that would be another sign of strength after gaining a total of 3.7 percent on the first four trading days of the year. Because this mark was an important resistance recently, explains HSBC analyst Jörg Scherer.
In the best case, the index would even rise above the December high of 14,675 points, explains portfolio manager Thomas Altmann from asset manager QC Partners: “In net terms, the Dax has run sideways at a high level for the past eight weeks. A break above the December high would be the longed-for breakout to the upside.”
The price development in the euro zone could prove to be a price driver. Fresh inflation data is expected later this morning. Most recently, price data from leading economies in the currency area had signaled a weakening of the inflation rate from a high level. That would ease the pressure on the European Central Bank to hike interest rates.
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At the same time, however, there are two potential negative factors: On the one hand, German industry suffered the sharpest slump in orders in more than a year in November due to falling foreign demand. The orders were 5.3 percent lower than in the previous month, as the Federal Statistical Office announced on Friday. A drop of 0.5 percent was expected.
On the other hand, the US labor market continues to be very robust. According to the private US employment agency ADP, 235,000 jobs were created in December. Only an increase of 150,000 had been expected. Demand on the labor market is considered the key to the US Federal Reserve Bank stopping rate hikes.
US job market may move courses
That’s why investors are waiting for the US government’s official jobs report, which will be published in the afternoon and will also include public sector jobs. Economists expect jobs to rise by 200k after a rise of 263k in November.
That would be good news for the stock market, explains analyst Jochen Stanzl from the online broker CMC Markets: “In the event of weak labor market data, prices on the stock exchange could skyrocket, as this would be taken as another indication of falling inflation. Too good data, on the other hand, should trigger an upset stomach among investors.”
An unexpectedly robust labor market could prompt the Fed to hike rates longer and more generally, and then leave them elevated for longer. That would be a drag on the stock and bond markets.
countermovement in oil
Oil prices are rising slightly after the significant declines of the past few days. A barrel (159 liters) of North Sea Brent costs just under $79 – an increase of 0.3 percent on the previous day. The price for a barrel of the American West Texas Intermediate (WTI) variety rose by 0.4 percent to just under $74.
Crude oil from the North Sea has become cheaper by more than seven percent since the beginning of the year. Among other things, weak economic data from China weighed on oil prices as they fueled concerns about weaker demand in the world’s second largest economy.
Market observers also referred to the recent development of oil reserves in the USA. This slowed down the rise in oil prices before the weekend. U.S. oil reserves rose 1.7 million barrels to 420.6 million barrels last week, according to US government data from the previous day. Higher inventories of crude oil in the world’s largest economy usually weigh on oil prices.
Look at the individual values
Rheinmetall: In terms of individual values, Rheinmetall was one of the favorites with a plus of 1.5 percent. The share benefits from the German government’s decision to deliver several dozen “Marder” tanks from the Düsseldorf-based armaments group to Ukraine.
Stock market expert Koch: “A rally on Wall Street is not in the interest of the US Federal Reserve”
Mercedes-Benz: The carmaker was initially one of the losers. Mercedes-Benz wants to boost sales of electric cars with its own charging station network. By the end of the decade, more than 10,000 fast charging stations are expected to be installed in North America, Europe, China and other key markets. Mercedes-Benz calculates a low single-digit billion amount for the worldwide network.
Morphosys: A downgrade pushes the shares of the biotechnology company in the SDax down two percent towards 13 euros. The experts at the US investment bank Morgan Stanley have downgraded the title to “underweight” from the previous “equal weight” and lowered the price target to 12.50 from 17 euros. The reason they gave was the Bavarian company’s pessimistic annual forecast for its important blood cancer drug Monjuvi.
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