Dusseldorf The German stock market ended the first trading week of the year with a clear plus. The leading index Dax closed 1.2 percent higher at 14,610 points on Friday. On a weekly basis, this means an increase of 4.3 percent.
The Frankfurt stock exchange barometer thus closes above the important mark of 14,500 points and sends a sign of strength. Because this mark was an important resistance recently, explains HSBC analyst Jörg Scherer.
The next point of contact is now 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.”
By the afternoon, the Dax had been in the red on Friday. The weak figures for industrial production in Germany proved to be a burden. With the US job market report, the index turns positive. The data turned out better than expected, in December 223,000 more new jobs were created than forecast.
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A strong labor market is usually a sign of high inflationary pressures. The US Federal Reserve is currently trying to combat this with interest rate hikes. So basically, a robust labor market is a sign that the Fed needs to raise interest rates further to bring inflation down. This is a burden for the stock market.
However, the labor market report did not only have bad news, as Altmann notes: “The number of newly created jobs is as low as it was last in December 2020. The labor market is still growing, but it is growing much more slowly. At the same time, the unemployment rate remains near its 70-year low. That’s exactly what the Fed wants to see.”
The judgment of Ulrich Wortberg from Helaba is similar: “The figures are robust, but since wage pressure seems to be easing, interest rate expectations are unlikely to be pushed.” This ensured that the stock exchanges initially reacted positively to the labor market data.
In the morning there had already been positive news regarding price developments in the euro zone: the inflation rate fell more than expected to 9.2 percent in December. The fact that the Dax did not react clearly to this is possibly a sign that declining inflation rates have now been priced in.
Alexander Krüger, chief economist at the private bank Hauck Aufhäuser, also pointed out: “The inflation rate is falling, but the fight against inflation is not yet won. Due to the lack of state aid, a countermovement is already threatening in January.” Lower price pressure could mean that the European Central Bank will raise the key interest rate less sharply in the future.
US stock market expert Koch: “Wall Street breathes a sigh of relief after stable US job market data”
The economic figures from Germany on Friday also made clear the risk of recession that is hanging over the German economy and the stock exchanges: In November, German industry suffered the sharpest drop in orders in more than a year 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.
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 around 80 dollars – an increase of 0.96 percent on the previous day. The price for a barrel of the American West Texas Intermediate (WTI) variety rose by 1.05 percent to a good 75 dollars.
Crude oil from the North Sea has become cheaper by more than four 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
Fresenius: In the overall uncertain environment, defensive stocks that are less affected by economic fluctuations are in demand. Fresenius increases in the Dax by 1.6 percent. The major Swiss bank UBS had raised the target price by two euros to EUR 32.50 and reiterated its buy recommendation.
Rheinmetall: In terms of individual values, Rheinmetall is one of the favorites in the MDax with a plus of 3.6 percent. The share benefits from the German government’s decision to deliver several dozen “Marder” tanks from the Düsseldorf-based armaments group to the Ukraine.
Morphosys: A downgrade pushed the shares of the biotechnology company in the SDax around one percent into the red. During the course of the day, the paper recovered and ended a good three percent in the plus. 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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