This is another trend that has already been observed several times in the past few weeks: without the fundamental situation having really changed, the stock market shows medium to large price movements. Investors have to get used to this phase.
Bank stocks were among the biggest gainers Monday. Deutsche Bank shares were up around three percent in the afternoon. Above all, the prospect of significantly rising interest rates in the euro area is fueling speculation.
On Thursday, the European Central Bank (ECB) will discuss its future course at its Council meeting. ECB President Christine Lagarde has already announced rate hikes for July and September. Experts expect an increase of a quarter of a percentage point for Thursday. However, an even stronger step is not completely out of the question. Most banks tend to benefit from this because it increases their profit margins in the lending business.
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>> Read here: Italy’s government crisis becomes a test for the ECB
In addition, two other US institutes, Goldman Sachs and Bank of America, presented further quarterly figures on Monday. Although both of these posted a slump in profits, the results were better than analysts had expected. As a result, stocks are trading in the black before the start of trading on Wall Street.
The reason for the poorer results was the gloomier economic outlook. This is reflected, among other things, in higher risk provisions and lower income in investment banking.
Goldman Sachs posted net sales of $2.9 billion in the three months ended June, down 47 percent from a year ago. The situation at Bank of America is similar. Profits here fell 33 percent year-on-year to $6.2 billion.
In the past week, several institutes had disappointed with their results. The largest US bank JP Morgan and its competitor Morgan Stanley reported a significant drop in earnings in the second quarter. JP Morgan then announced that it would temporarily suspend the billion-euro buyback of its own shares announced in April in order to meet higher capital requirements. This, in turn, clearly affected the papers of the big bank.
Government crisis in Italy strains the nerves
In Europe, the government crisis in Italy was the focus of investors at the beginning of the week. Italian Prime Minister Mario Draghi announced his resignation last week after the co-governing Five Star Movement abstained in a key Senate vote on a stimulus package.
President Sergio Mattarella initially refused to resign. Draghi is expected to declare on Wednesday whether or not he will make another attempt to continue the government sticks to his resignation.
Look at the individual values
BASF: According to an analyst study, the shares are among the strongest values with a price gain of three percent. Matthew Yates from Bank of America recommended buying the Ludwigshafen shares with a price target of EUR 50, making a U-turn after his last skeptical rating.
Covestro: In an interview with the Börsen-Zeitung over the weekend, the CFO of the chemical group Covestro, Thomas Toepfer, stated that the operating result (Ebitda) in the second quarter will be at the upper end of the forecast range of 430 to 560 million euros. The previous consensus estimate is 500 million euros. The stock is up three percent.
Stellantis: The French carmaker ends its joint venture with the Chinese carmaker GAC. As a result, cash impairments of around 297 million euros were incurred in the first half of the year, as the group announced on Monday. Stellantis previously announced its intention to increase its stake in the joint venture, which has been making Jeeps since 2010, to 75 percent. The plan was immediately rejected by the Chinese partner. The stock gains 2.5 percent.
Unipers: The gas company taps into its remaining liquidity reserves. The company announced that the existing credit facility of the state KfW in the amount of 2 billion euros has now been fully utilized. The Uniper share certificates increase by one percent.
Haleon: The IPO of the supplier of “Voltaren” ointment was moderate. Shares hovered around their opening price of 330 pence in London. The consumer goods division of the pharmaceutical company GlaxoSmithKline was valued at a total of 36.5 billion euros. Analysts had credited Haleon with a market value of up to 56.5 billion euros.
Direct line: Direct Line’s profit warning sends UK auto insurers’ stocks tumbling. Direct Line shares fell more than 14 percent on the London Stock Exchange to an eight-year low after the car insurer lowered its profitability forecast and postponed the second tranche of a share buyback. Rivals Admiral and Saber Insurance Group also fell significantly.
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