Frankfurt The Dax gave way on Friday in the wake of weaker New York stock exchanges. Strong job data from the US slowed international investor interest in equities.
The Dax initially appeared friendly in pre-Pentecost trading. The most important German stock market barometer rose by up to 0.7 percent, but then turned down again near the 14,600 point mark. Finally, it closed more or less at its previous day’s level – down 0.2 percent at 14,460 points.
His weekly balance was still wafer-thin negative. On Thursday, the leading German index closed one percent higher at 14,485 points. The Euro Stoxx 50 and the leading US indices had made similar gains.
The MDax did not move much on Friday. The index closed almost unchanged 0.03 percent lower at 30,224 points.
Concerns about interest rates and inflation, the war in Ukraine and supply chain problems have been weighing on the stock markets for weeks. Since the beginning of the year, the leading German index has fallen by almost nine percent.
The main reason for the Dax decline in the afternoon was the strong US labor market data. In May, US companies hired more staff than expected, which was interpreted as an indication of economic confidence. Non-farm payrolls rose by 390,000 in May, April figure has been revised upwards.
US investors took the generally good news rather negatively. Analysts explain the connection as follows: the better the economy is doing, the more likely it is that the US Federal Reserve will raise interest rates again. But they would make loans more expensive for companies, slow down investments and thus reduce the chances for further growth.
“The labor market report does not stand in the way of the US Federal Reserve’s plans to raise the key interest rate range by 50 basis points in June and July,” says Ulrich Wortberg, an analyst at Helaba. “However, the interest rate expectations, which are already pronounced, should not be pushed ahead,” he qualifies.
The surprisingly strong German exports initially provided confidence on Friday morning. Exports recovered more sharply than expected in April from the shock after the outbreak of war in Ukraine. They grew by 4.4 percent on the previous month to 126.4 billion euros due to good business with the USA and the euro countries, as reported by the Federal Statistical Office.
Economists surveyed by the Reuters news agency had only expected an increase of 1.5 percent, after there had been a seasonally and calendar-adjusted decline of three percent in March. Imports also increased far more than expected this time at 3.1 percent, after a plus of 3.2 percent in the previous month.
“Logistics issues continue to be a major burden.” Ifo President Clemens Fuest
However, German exports to Russia fell by ten percent in April to just 0.8 billion euros, after having collapsed by more than 60 percent in March. The reason for this was the sanctions in response to the war against Ukraine and other measures restricting exports. Imports from Russia even fell by 16.4 percent to 3.7 billion euros. Germany mainly imports oil and natural gas from there.
Mood has brightened
According to a survey by the Ifo Institute in May, the mood among German exporters has brightened for the second month in a row. “But German industry remains cautious,” said Ifo President Clemens Fuest. “Logistics problems continue to represent a major burden.” The Association of German Chambers of Industry and Commerce (DIHK) expects exports to stagnate this year.
In the coming week, the euro zone central bank will also be in focus. On Thursday, the Governing Council of the European Central Bank (ECB) will decide on its future monetary policy course. Economists and investors assume that the ECB will decide to turn around interest rates and announce that it will end its bond purchases at the beginning of the third quarter. In addition, the ECB is expected to signal the end of the negative deposit rate and possibly the first interest rate hike in eleven years.
A turnaround in interest rates is already anticipated in bond prices and yields. The prices of the ten-year government bonds that dominate the market in the USA and Germany have already fallen more than ten percent this year, while their yields have risen significantly in return.
The German government bond has hit an eight-year high at 1.27 percent. The yield on the ten-year US bond has meanwhile exceeded the three percent mark. In the evening she lay down 2.95 Percent.
Comeback of the cosmetics manufacturer Beiersdorf
In the evening, investors are also eagerly awaiting the result of the regular review by Deutsche Börse on the composition of the indices in the Dax family. A comeback of the cosmetics manufacturer Beiersdorf is expected in the leading index. In addition, the armaments group and automotive supplier Rheinmetall will probably rise to the first German stock exchange league. Shares closed Friday down 0.1 percent and up 5.3 percent. The construction supplier Heidelberg Cement and the food supplier Delivery Hero will have to give way.
The price of North Sea Brent oil was up more than one percent on Friday at $119.81 a barrel after the OPEC+ export cartel agreed on higher production quotas for the summer months. The group, which also includes the producing country Russia in addition to the OPEC members, decided to increase the volume by 648,000 barrels per day for the months of July and August.
Situation on the energy markets remains tense
Actually, increases of 432,000 barrels per day were planned for the three months to September in order to gradually reverse the production cuts decided in 2020 in the wake of the corona pandemic.
According to strategists, the situation on the energy markets remains tense. If the price continues to rise, the spiral of inflation could turn faster again and cause the central banks to raise interest rates more significantly than the financial markets would like.
In London there is again no action due to the celebrations for the 70th anniversary of Queen Elizabeth II. At the end of the week, the stock exchanges in China and Hong Kong will also be closed for a holiday.
Individual values at a glance
Adidas and Puma: Among the companies, Adidas was one of the favorites with a price gain of 1.2 percent. The stock closed 0.1 percent up. Stockbrokers referred to encouraging business figures from competitors, which brightened the mood in the industry. Yoga apparel specialist Lululemon reported quarterly results that exceeded market expectations and raised its full-year targets. At Fast Retailing, the mother of the Japanese fashion brand Uniqlo, sales increased by 17.5 percent in May within a year. Puma was only able to profit in early trading, later the initial profits were lost. The stock closed 0.5 percent down.
Fresenius: Fresenius and Fresenius Medical Care shares gained almost half a percent. According to reports, the medical and hospital group wants to cut numerous jobs in its liquid medicine division.
Leonardo: The stock rose by up to 3.6 percent to a two and a half year high of EUR 10.58. According to insiders, Rheinmetall has made a non-binding offer of up to 210 million euros for a 49 percent stake in OTO Melara, the armaments group’s gun construction division. Analysts at Banca Akros commented that the lack of precise business figures for OTO Melara makes it difficult to assess whether the offer is fair. Other brokers warned of a possible veto by the Italian government.
Compugroup Medical: The courses of the SDax member Compugroup Medical went down 3.9 percent. The software company specializing in medical practices is reorganizing its management system. That should cause irritation among investors, according to a trader.
With agency material
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