Dusseldorf The German stock market remains undecided. On Friday, positive guidelines from the USA initially caused the leading index Dax to reach a high for the year, followed by disappointing economic data from Germany, which caused prices to fall. With the slightly better than expected inflation data, the Frankfurt stock exchange barometer then turned upwards again. Most recently, the Dax was slightly up at 15,813 points.
The mood in the USA is supportive. There, the market-wide S&P 500 index rose by almost two percent on Thursday due to the surprisingly good reporting season. This is also driving German stocks, explains portfolio manager Thomas Altmann from asset manager QC Partners: “The specifications from the USA are so good that they cannot be ignored.” As a result, the Dax reached a new annual high of 15,919.5 points, the old one had been 15,919.1 points.
On the other hand, disappointing economic figures for Germany are slowing down development: the gross domestic product (GDP) stagnated from January to March compared to the previous quarter, as the Federal Statistical Office announced on Friday. 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 are depressing the mood.
The inflation numbers in the afternoon, on the other hand, were slightly better than expected. In April, the German inflation rate fell to its lowest level in eight months. On average, consumer prices were 7.2 above the level of the same month last year, as the Federal Statistical Office announced on Friday 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.
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 next interest rate decision by the European Central Bank is due next Thursday.
15,700 point level as support
A well-known phenomenon is repeated for the Dax: the Dax keeps hitting new highs, but these are only shifted up by a few points – in the current case even less. Then there are no follow-up purchases. In two of the three most recent cases, the Dax ended the trading day in the red.
This shows the declining upward momentum and is a sign of the currently prevailing skepticism – especially since April marks the end of the historically best month on the stock market and the beginning of a market period that tends to be weaker. However, the Dax recently found support around the level of 15,700 points. So when prices fell, buying interest kicked in here. On Friday, too, prices turned upwards again at this level. That’s a sign of strength.
However, should this level be undercut for a long time, there would be a mathematical further downward potential of 200 points, warns analyst Jörg Scherer from HSBC Germany. On the upside, today’s record high must first be confirmed in the long term. The next target would then be the previous record high of 19,290 points.
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 0.7 percent to 134.94 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 value turned negative after a positive start and was last listed almost unchanged.
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 share benefits from the news and rises almost eight 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 more than 15 percent.
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 almost ten percent to less than 24 euros.
Software AG: Shares in the software company rose by around 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 loses more than two percent.
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