Frankfurt The Dax continued to recover on Friday. The leading German index rose by a good one percent to 15,490 points by the afternoon and was even briefly listed above the 15,550 point mark again after making up for its initial losses on Thursday and closing moderately positive. The development of the Lufthansa share had a particularly strong effect. It gained around six percent in value.
There were also positive reports on the economy on Friday. German exporters got off to a surprisingly good start to the year, also thanks to strong demand from their most important customer, the USA. Their exports grew in January by 2.1 percent compared to the previous month to 130.6 billion euros, as the Federal Statistical Office announced on Friday.
Economists polled by the Reuters news agency had only expected growth of 1.5 percent after a 6.3 percent slump in December.
The US stock exchanges closed tighter on Thursday after fluctuating prices. The Dow Jones index was up 1.1 percent to close at 33,003 points. The tech-heavy Nasdaq index advanced 0.7 percent to 11,462 points.
The chairman of the Atlanta branch of the Fed said he favors a slow and steady stance from the US Federal Reserve with hikes of 25 basis points as the impact of higher interest rates may not be felt until spring. As a result, US 10-year Treasury yields eased from a four-month high. In addition, robust company balance sheets supported prices on the overall market.
In early trading, concerns about interest rates and a price slide at Tesla had clouded the mood on Wall Street.
Measures taken by the ECB: Further rate hikes in sight
The next meeting of the European Central Bank (ECB) in two weeks is likely to be dominated by the hawks again, as inflation numbers surprised in almost all major euro-zone countries. Hawks are central bankers who are more inclined towards tighter monetary policy with higher interest rates.
For the stock markets, Janus Henderson Investors believes that persistent inflation and the lack of a change in course by central banks will continue to mean that value stocks will outperform higher-rated growth stocks – and as a result, Europe, as a much cheaper “value” market, should also do better than the US – Stock market perform.
Ultimately, given the usual delays of up to a year, the significant monetary tightening will have a significant impact on the economy. This will then be the moment when stocks can no longer expect a reversal but a pause from the central bank. This could then be a good entry signal.
Government bond prices were firmer on Friday. Prices rose, while yields fell. The ten-year bonds returned 2.705 percent after 2.754 percent on Thursday.
Potential Fed rate hike could dampen oil demand
Oil prices have fallen slightly. At midday, a barrel (159 liters) of North Sea Brent for delivery in May cost 84.50 US dollars. That was 0.3 percent less than the day before. Investors in the oil market have received conflicting signals this week.
On the one hand, the latest surveys from China point to an imminent economic recovery, which would also benefit crude oil demand. On the other hand, the US economy is surprisingly robust, while high inflation is only slowly declining. The US Federal Reserve could therefore feel compelled to raise its interest rates more sharply in order to slow down economic momentum. That would likely dampen oil demand as well.
Cryptocurrency Bitcoin under pressure
At the end of the week, the euro had recovered from the previous day’s losses and had risen above the USD 1.06 mark again. At $1.0615, the common currency cost a little more than the night before.
Cryptocurrency Bitcoin fell to its lowest level in two weeks. The trigger was the reports about a possible bankruptcy of the crypto bank Silvergate Capital Corp. Bitcoin’s value fell 4.5 percent to $22,360.
Before the weekend, numerous economic data are on the program, which could cause movement on the foreign exchange market. In the euro zone and the USA, for example, the purchasing manager indices for service providers are expected. The survey provides information about the economic situation. In addition, price data from the corporate sector is due in the euro area. Some high-ranking central bankers also want to have their say.
Look at the individual values
Rheinmetall: In February, Rheinmetall was defeated by Commerzbank when it came to entering the Dax – but now the armaments group is about to be included in the leading index of the 40 most important listed companies. Deutsche Börse’s decision will be made on Friday evening around 10 p.m., but Rheinmetall is clearly ahead in the relevant February rankings. The stock climbed 0.8 percent.
Lufthansa flies a profit … Lufthansa also has a chance of returning to the Dax. After the massive losses during the corona pandemic last year, the group has made a profit again. Adjusted operating profit was 1.5 billion euros after a deficit of 1.7 billion euros a year earlier, the airline announced on Friday. The strong demand for flights from travelers and in air freight brought the airline 2022 almost twice as much revenue as in the previous year at 32.8 billion euros. Lufthansa boss Carsten Spohr has announced rising ticket prices for the current year. The company expects strong global demand with limited supply. The stock gained more than 6 percent.
…but pays no dividend: Despite the annual profit, the shareholders should not receive a dividend for 2022, as can be seen from the annual report of the crane airline. In addition, the Executive Board wants to have liquidity of eight to ten billion euros in order to better protect Lufthansa against crises. “Only a strong balance sheet gives us the necessary resilience to invest in the future of our company and to overcome future crises,” said CFO Remco Steenbergen.
Infineon: The company is in focus after an acquisition. The chip group Infineon is expanding its business with innovative power semiconductors for electrical applications with a takeover. The Canadian manufacturer GaN Systems is going to the Munich manufacturer for 830 million US dollars, Infineon announced on Thursday. The stock was up 0.7 percent at midday.
Volkswagen: The supervisory board of the Wolfsburg car manufacturer meets and has a number of issues on the table. On the one hand, the five-year plan for investments and the occupancy of the plants must be decided, which CEO Oliver Blume presented to the committee in February. On the other hand, according to an insider, the decision for a separate production plant for the new Scout brand in the USA is on the agenda. The preferred share was up 1.4 percent.
ericsson The determination of an expected fine in the US supported the shares of the Swedish telecom equipment maker Ericsson. The papers rose by four percent to 60.10 crowns. The company is to pay $206 million to the US Department of Justice. That roughly corresponds to the amount that Ericsson had put aside for the fine. Analysts had expected a higher amount.
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