Agreement on US debt ceiling gives investors a sigh of relief

Frankfurt The leading German index, the Dax, rose significantly on Friday. After a hesitant start, the stock market barometer climbed until late afternoon and closed with a plus of a good 1.3 percent to 16,051 points. The much-noticed 16,000-point mark was thus still exceeded. On Thursday, the Dax had already risen by 1.2 percent.

The US government published new labor market data in the early afternoon German time: According to this, there was a strong increase in the number of employees in May, but at the same time a slightly higher unemployment rate. With 339,000 new workers after 294,000 in April, significantly more people have started a new job than expected. On average, economists had expected an increase of 195,000 employees. However, the unemployment rate rose slightly to 3.7 percent in May, after 3.4 percent previously. Here 3.5 percent had been expected.

According to strategists, the US capital market is speculating that there will be a pause in interest rates given the minimal drop in hourly wages. The average hourly wage rose 0.3 percent month-on-month in May, after 0.5 percent in April.

According to analysts, however, the figures should strengthen the US Federal Reserve in its strict monetary policy and weaken hopes of an interest rate pause. “Employment momentum is still very high and the unemployment rate is low, although it has increased significantly,” comments Ralfcircul from Helaba. Overall, the latest data should encourage those Fed officials who have so far avoided declaring the end of the interest rate cycle, he says.

Speculations about an interest rate pause by the Fed continue

So far there are indications of a Fed pause in June, but it is not a foregone conclusion. The risk of a further interest rate hike in July is already included in the prices on the markets, according to though. “Today’s figures should not weaken these expectations,” says the analyst.

In connection with the labor market figures, analyst Esther Reichelt from Commerzbank refers to a statement by the well-known economists Ben Bernanke and Olivier Blanchard, who analyzed the inflation dynamics during and after the pandemic in more detail. Accordingly, the Fed is unlikely to succeed in bringing inflation back to its target level without a more pronounced economic downturn. As a result, the Fed will probably want to see an easing in the labor market before considering a less tight monetary policy, says the analyst.

Investors reacted with relief to the final agreement on raising the US debt ceiling on Friday. Late Thursday night, the second chamber of legislature, the Senate, also passed President Joe Biden-backed legislation that would remove the $31.4 trillion debt ceiling — averting a historic default. The Senate voted 63-36 in favor of the bill, which passed the House of Representatives on Wednesday.

This ends a long political nail-biter that had caused great concern on the markets about an economic crisis. US Treasury Secretary Janet Yellen recently warned that without an agreement, the US government would run out of cash by June 5th. The solution was therefore reached just before the deadline.

Senate Majority Leader Chuck Schumer said he was relieved. “We avoided a catastrophic default,” he said. The Democrats in particular would have carried the agreement across the finish line, because in both chambers of Congress more Democrats than Republicans would have voted for the deal.

The markets in Asia also reacted positively to the final agreement. The 225-stock Nikkei Index rose 1.2 percent. The Hang Seng index on the Hong Kong Stock Exchange even climbed around four percent, while the CSI 300 index of mainland China’s most important companies rose 1.4 percent.

Oil market before the decision of the Opec-plus countries in the eyes of investors at the weekend

Also in focus are the oil prices, which turned negative again this week, but recovered towards the end of the week. The North Sea crude oil Brent rose by more than two percent to a good 76 dollars for a 159-liter barrel (barrel) on Friday after the price had already risen a good two percent on Thursday. Similarly, the price for the US grade WTI increases to over 71 dollars per barrel.

>> Read here: Why it at Opec meeting between Saudi Arabia and Russia could lead to tensions

“This is a very interesting development ahead of the Opec plus oil cartel meeting over the weekend and after Saudi Arabia’s energy minister warned investors not to bet on prices going higher,” said Craig Erlam, an analyst at US trading house Oanda. However, raw materials experts are rather skeptical as to whether the funding association will cut production again.

Look at individual values:

Adidas: Among the biggest winners in the Dax are Adidas papers with a plus of 5.3 percent. Sporting goods manufacturers are benefiting from the good mood in the industry after the positive figures from the yoga clothing manufacturer Lululemon. The company raised its full-year guidance for sales and earnings.

Puma: In the MDax, the shares of the competitor Puma also increased by six percent.

Real estate values: Real estate values ​​are on a recovery course at the end of the week. Vonovia papers increase by around four percent. In the MDax, TAG Immobilien and LEG Immobilien advanced by 3.3 and 4.3 percent respectively. Aroundtown shares are up 3.1 percent.

The sector has recently been particularly affected by the consequences of higher interest rates and the skyrocketing construction costs. The fact that ECB President Christine Lagarde stressed the importance of further interest rate hikes on Thursday put an additional damper on many stocks, according to a trader. Since the beginning of the year, Vonovia and LEG Immobilien have been down by more than 20 percent.

Per seven sat: The shares of the media company from the MDax rose by 2.4 percent after the Czech billionaire Renáta Kellnerová increased her stake in the TV producer. The PPF Group, which it controls, increased its stake, including financial instruments, to 15.04 percent.

Economy: The papers of the electronics retailer from the SDax rose by up to almost three percent, but in the afternoon the plus melted down, the papers were unchanged in the afternoon. The trading company wants to become more profitable by the middle of the decade, as it announced at its Capital Markets Day. The Düsseldorf-based company wants to make significantly more sales in online trading. In addition, the stores of MediaMarkt and Saturn are to be comprehensively modernized.

Evotec: The biotech’s stock rose 3.1 percent to its highest level since September. This means that the increase since the beginning of May has already totaled almost 40 percent. The titles reacted to the announcement that the drug researcher received funding of 1.7 million US dollars. The donor Open Philanthropy wants to advance the discovery of RNA-based therapies against henipaviruses.

However, after being kicked out of the MDax due to the delayed submission of the annual report, Evotec expects to return to the small-cap index. The chances are good for the Hamburg biotech company if you look at the ranking of the market capitalization required for this.

On Monday evening, Deutsche Börse decides on the composition of its indices. The stock exchange operator took Evotec shares out of the MDax last month after the company was unable to submit the audited annual report by the end of April as required – according to its own statements due to a cyber attack.

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