Dusseldorf The German stock market remains nervous, but is working its way up step by step. On Friday, the leading index Dax rose to a new high for the year of 15,922 points with the closing action.
The Frankfurt stock exchange barometer ended the trading day 0.8 percent up, on a weekly basis there is a profit of 0.3 percent. This brings the 16,000 point mark into view again, above which the record high of 16,290 points is already waiting as the next point of contact.
Trading on Friday contained several twists and turns: After a positive start, the Dax fell to 15,688 points before turning up again from midday and closing with an annual high – the seventh this April. However, the mark was only moved up a few points each time. On a monthly basis, there is an increase of almost two percent – for the traditionally strong month on the stock market, this is a below-average yield.
The high for the year on Friday was made possible by the inflation figures for Germany, which were slightly better than expected in the afternoon. The inflation rate fell to its lowest level in eight months in April. On average, consumer prices were 7.2 times higher than in the same month last year, as the Federal Statistical Office announced in an initial estimate. This is the lowest value since August 2022. Economists surveyed by Reuters had only expected a decline to 7.3 percent.
Economist Michael Heise from the Family Office HQ Trust comments: “The reduction in price increases is progressing in tiny steps.” The fact that the massive increase in food prices has slowed considerably is particularly pleasing. The drop in inflation is important because it shows that the European Central Bank’s interest rate hikes so far are working and that it may not have to raise rates as much as feared in order to reach its inflation target of 2.0 percent.
However, Heise points out that core inflation, which includes goods and services without energy and food, is increasingly affecting the level of overall inflation: “This is reflected in the fact that the cost increases of recent months are being passed on to prices.”
The only very slow decline in inflation in April is therefore a “clear indication” that the stabilization of the price level will be a lengthy process that will probably strain consumers’ patience. “An interest rate hike by the ECB of at least 25 basis points should be fairly certain for Germany with these inflation data,” says Heise. The ECB’s next interest rate decision is due next Thursday.
The economic figures for Germany had been disappointing on Friday: the gross domestic product (GDP) stagnated from January to March compared to the previous quarter, as reported by the Federal Statistical Office. Economists surveyed by the Reuters news agency had expected an increase of 0.2 percent, after a revised minus of 0.5 (previously: minus 0.4) percent in the fourth quarter. This optimistic assessment was already priced into the prices, which is why the disappointing numbers depressed the mood.
Yen under pressure
After the interest rate decision by the Japanese central bank (BOJ), the national currency, the yen, is going downhill. The dollar, on the other hand, rose 1.5 percent to 136.53 yen.
The Japanese central bank stuck to its ultra-loose monetary policy at the first interest rate meeting under its new governor Kazuo Ueda. The currency guardians decided at their meeting that they wanted to subject monetary policy to a broad-based review, but they wanted to take a year and a half to do it.
Commerzbank analyst Ulrich Leuchtmann therefore comments: “This statement should have shaken the hopes of those (including me) who had hoped that at least a slow, gradual turn towards normalization of monetary policy could take place, if not a U-turn immediately with Kazuo Ueda taking office.”
Individual values at a glance
Mercedes Benz: The carmaker increased its consolidated profit by twelve percent to four billion euros – and thus even more than the already announced operating profit. The share of the sixth largest Dax rose by 0.7 percent.
Covestro: For the plastics group Covestro, the year could be easier than initially feared. For 2023, Covestro now expects, at best, an operating profit (Ebitda) at the previous year’s level of EUR 1.6 billion or a decline to EUR 1.1 billion. So far, the Leverkusen-based company had forecast earnings well below the previous year’s figure.
The current share buyback program, which was put on hold in the middle of last year due to the gloomy economic prospects, is also to be resumed in the short term. The stock benefited from the news, rising 8.5 percent.
Per seven Sat 1: The MDax group had already announced a massive dividend cut and a drop in profit and sales on Thursday evening. In addition, Pro Sieben Sat 1 is parting ways with CFO Ralf Gierig with immediate effect and by mutual agreement. The stock fell about 17 percent. “ProSieben killed its share as a dividend stock,” said a trader from the Reuters news agency.
hellofresh: The US bank JP Morgan has increased its price target for the recipe box mailer from 27 to 31 euros. After a positive start, the share of the MDax group turned negative and lost 5.7 percent to 24.23 euros.
Software AG: Shares in the software company rose by almost two percent in the SDax small-cap index. The news agency Bloomberg reports that the activist investor Elliott has joined Software AG. The Darmstadt-based company, which is in the middle of restructuring, is about to be taken over by the US financial investor Silver Lake for 2.2 billion euros.
Varta: The ailing battery manufacturer cuts its forecast again. Sales will now be between 820 and 870 million euros, the SDax company announced on Friday. So far, Varta had assumed 850 to 880 million euros. The stock lost 3.4 percent.
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