The leading German index is on a downward trend this year – despite the recent recovery.
(Photo: Bloomberg Creative/Getty Images [M])
Frankfurt Fading fears of an economic downturn are drawing investors back to European equity markets. Dax and Euro Stoxx rose on Whit Monday by around one percent to 14,606 and 3833 points respectively. On Friday, the leading German index closed slightly in the red at 14,460 points.
Stockbrokers were busy gleaning the surprisingly strong US jobs data from Friday. The robust job market points to stable incomes and is thus dampening fears of a recession for the time being, said economist Jonathan Millar from Barclays Bank. However, Naeem Aslam, chief market analyst at brokerage house AvaTrade, warned against excessive optimism. The current recovery could turn out to be a flash in the pan.
He expects greater clarity about the further development of interest rates and thus the stock market from the US inflation data on Friday. Experts expect inflation to remain unchanged at 8.3 percent year-on-year in May.
Stockbrokers are also eagerly awaiting the Council meeting of the European Central Bank (ECB) on Thursday. If ECB boss Christine Lagarde does not rule out a rate hike of half a percentage point in July, the euro will appreciate, a stockbroker predicted. At the start of the week, the common currency rose 0.2 percent to $1.0743.
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Economic optimists were also in the majority on the commodity market. They are counting on increasing demand from top buyers in China. The normalization of the economy there after the end of the corona lockdowns seems to be making good progress, said Stephen Innes, managing director at asset manager SPI. This helped copper gain 2.4 percent to $9,727 a ton. Iron ore prices in China rose as much as 3.4 percent to a ten-month high of 1,008.50 yuan ($152).
Oil price rises – increase initially by leaps and bounds
Hopes for more Iranian crude for the world market dampened the rise in oil prices a little on Monday. They initially rose more sharply at the beginning of the week after Saudi Arabia surprisingly raised prices for exports to Asia.
But then a report circulated that the US government, under pressure ahead of November’s elections, could allow Iran to export more oil, said analyst Stephen Innes of SPI Asset Management. Crude oil prices then gave back part of their initial gains.
A barrel (159 liters) of North Sea Brent cost 120.57 US dollars, 80 cents more than on Friday, after it had meanwhile gone up to almost 122 dollars. The price of a barrel of the US West Texas Intermediate (WTI) variety increased by 84 cents to $119.71.
Oil prices had risen in the past week, although the OPEC+ oil association plans to expand its production in July and August. However, analysts were skeptical as to whether the additional supply would be sufficient to compensate for the scarce world market supply.
“Perhaps only a third to half of what Opec+ has promised will come online in the next two months,” said Vivek Dhar, mining and energy analyst at the Commonwealth Bank of Australia. Russian production in particular has recently been under pressure due to severe Western sanctions as a result of the Ukraine war.
View of the stock market in Asia
The prospect of a fresh wind in the economy encouraged investors to enter the Asian equity markets. The Japanese Nikkei index rose on Monday by 0.6 percent to 27,915 points and the Shanghai stock exchange by 1.1 percent to 3,236 points.
Investors are encouraged by the end of the corona lockdowns in the Chinese capital and above all in the economic metropolis of Shanghai, the analysts at Bank Morgan Stanley wrote in a comment. However, this has so far been more of a psychological factor. It is not yet reflected in the economic data.
Another sentiment lifter was the prospect of further economic stimulus support from the Chinese central bank. In Japan, investors are backing a government program to revitalize tourism, which includes accommodation vouchers, among other things. This helped the airline ANA and the travel agency HIS to gain exchange rates of around three percent each.
Individual values in focus
Nemetschek: The software house is one of the winners on the German stock market with a plus of 3.4 percent to 69.34 euros. The analysts at Citigroup start their rating of Nemetschek with “Buy” and a price target of 85 percent.
More: Dax Weekly Outlook – All eyes are on Christine Lagarde