Boost from balance sheets: DAX is moving forward with great momentum

Market report

Status: 10/26/2021 1:23 p.m.

Inspired by strong company reports, investors replenish their portfolios. But investors shouldn’t be too careless as problems remain that could depress sentiment.

The DAX crossed the 15,700 mark again: around noon it was up around one percent at 15,750 points. This means that the leading German index has left two round brands behind in one morning.

“It is the flood of good quarterly figures that are currently getting the stock market going,” comments Jochen Stanzl, chief market analyst at CMC Markets. In the past few weeks, a negative mood has built up around the topic of inflation and fear of interest rates, which is now breaking new ground in the current reporting season, according to the expert, “because companies are apparently better than coping with the current general conditions of rising raw material prices and supply bottlenecks feared by investors “.

“So far, the figures are solid, because the results of more than 80 percent of US companies have exceeded expectations,” says Olivier de Berranger from the French fund company LFDE.

Is the year-end rally coming?

From a technical chart perspective, the situation in the DAX should have brightened significantly with the jump over the 15,700 point mark, my market observer. “The German share index overcomes the interim highs of the previous weeks and is heading for its records again. Investors there will have to be patient again, but then a year-end rally is possible as a reward,” says Andreas Büchler from Index Radar.

At the same time, investors should not ignore the problematic facets of the current market situation: The overall market development is also influenced by the topics that have recently become established, say the Helaba experts. The analysts address the supply chain problem, the situation on the Chinese real estate market, the further development of the corona pandemic and inflation concerns.

Economic forecast weaker

As reported by the Reuters news agency, economic difficulties could also threaten: The federal government will significantly lower its growth forecast (GDP) for 2021 to 2.6 percent, Reuters quotes two insiders. The outgoing Federal Minister of Economics Peter Altmaier (CDU) wants to present the forecasts tomorrow in Berlin. At the end of April, he had raised it for this year and expected an increase of 3.5 percent.

Current economic data also fit in with this. The mood in the German export industry deteriorated significantly in October due to the ongoing material shortages, as reported by the Ifo Institute. The barometer for their export expectations fell by 7.5 to 13.0 points. This is the worst value since February 2021.

In the US, the futures are currently indicating that Wall Street will open more firmly on Tuesday as well. Yesterday the Dow Jones and S&P hit record highs of 500. After the US stock market closes, the tech companies Alphabet and Microsoft as well as Twitter and Visa will present their balance sheets.

Oil prices are falling somewhat in today’s trading, but they are still trading near their multi-year highs. Because despite the recent increase in demand, the Opec + oil network is probably only hesitantly expanding its range.

Observers assume that Opec + will increase its production again by just 400,000 barrels per day at its meeting in the coming week. Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, recently confirmed the oil-rich country’s cautious stance.

Strong demand in all segments brought the US parcel service UPS a surprisingly strong profit jump in the summer. The bottom line was a result of 2.3 billion US dollars in the third quarter, 19 percent more than in Corona summer 2020. Sales jumped nine percent to 23.2 billion dollars and thus also stronger than experts thought.

Sales in the foreign business of the rival Deutsche Post increased particularly strongly. But there was also an upward trend in supply chain logistics. In the traditional business on the US home market, the group benefited from the fact that its customers paid an average of twelve percent more per parcel than a year earlier

When it comes to group sales in the third quarter, Facebook missed the analysts’ expectations. They had expected on average a good 29.5 billion dollars, Facebook managed an increase of 35 percent to 29 billion dollars. The bottom line was that Facebook earned around $ 9.2 billion – a year-on-year increase of 17 percent. In future, the company would like to focus strategically primarily on younger users.

Tesla set two records at once: The electric car maker cracked the $ 1 trillion market value and exceeded the $ 1,000 mark for the first time with its share price. This means that the US group is valued almost twice as high on the stock exchange as BMW, Daimler, Volkswagen, Toyota, General Motors (GM), Ford and Stellantis combined.

The closing price was just under $ 1,025, an increase of 12.6 percent. The trigger for the rally is, among other things, an order for 100,000 vehicles by the car rental company Hertz. Tesla boss Elon Musk was surprised by the development on Twitter: The problem of his group is actually not the demand, but the ramping up of production.

UBS deserves more

In the third quarter, UBS again benefited from the favorable market conditions and the mostly positive investor sentiment. It not only clearly exceeded the already strong figures from the previous year, but also clearly exceeded the expectations of the market. The bottom line was that the largest Swiss bank earned $ 2.28 billion in the summer quarter. Experts had expected a significantly lower result. In the same quarter of the previous year, as in the previous quarter, the bank had made a profit of just over two billion dollars. Revenues rose year on year by around two percent and reached $ 9.13 billion.

Amazon founder Bezos plans space station

The space company of Amazon founder Jeff Bezos is planning its own station in space. The space station called “Orbital Reef” will be built together with several partners, including Boeing, and will be launched between 2025 and 2030, announced the company Blue Origin. “Orbital Reef” should offer space for up to ten people and also serve as a kind of “industrial site”, as well as a focal point for space tourists.

Meanwhile, Amazon is keeping an eye on the earth: According to a newspaper report, Great Britain’s espionage authorities have hired Amazon Web Services (AWS) to process confidential material. The aim is to make greater use of data analysis and artificial intelligence (AI) for espionage, wrote the “Financial Times” (FT). In the agreement with the cloud service unit from, the data of all local authorities in Great Britain will be stored, the newspaper reported, citing people familiar with the conversations.

Deutsche Wohnen is about to leave the DAX. After the second acceptance period has expired, Germany’s largest rental company Vonovia holds 87.6 percent of the previous number two in the industry. Deutsche Wohnen’s free float is therefore too small to be included in the index of the 40 most important listed companies in Germany. In such cases, Deutsche Börse usually responds within a few days.

During the index reform in September, the Hamburg consumer goods manufacturer Beiersdorf narrowly missed re-entry into the DAX. He could now move up for Deutsche Wohnen. Vonovia has so far spent around 17 billion euros on Deutsche Wohnen shares and is managing 568,000 apartments after the mega-merger of the two DAX groups.

The real estate investor Adler Group wants to part with another real estate package in order to reduce its debts. Adler signed a letter of intent with an investment fund on the key points for the sale of almost 15,000 apartments, mainly in eastern Germany. The agreed property value is more than one billion euros. The buyer, whose name Adler did not mention, wanted to take a closer look at the real estate package. The aim is to complete the transaction by early 2022.

The Adler Group is under double pressure: On the one hand, investors are demanding debt relief. On the other hand, the British short seller Fraser Perring raises allegations against the company, which had depressed the price of Adler shares.

A significant recovery in demand is giving the fragrance and flavor manufacturer Symrise a tailwind. In the third quarter, the group achieved organic sales growth of 8.3 percent. After nine months the increase was 9.2 percent. Adjusted for the takeover of the fragrance business of the US company Sensient and exchange rate effects, sales of 2.88 billion euros were 6.7 percent up on the same period of the previous year. Symrise is therefore raising its growth targets.

What is Novartis planning with Sandoz?

The pharmaceutical company Novartis is putting its ailing subsidiary Sandoz to the test. The Swiss announced a strategic review of the subsidiary, which specializes in generic drugs. The aim is to “maximize value for our shareholders”. As it was also said, the options range from maintaining the business in the group to separation. In the past third quarter, Novartis sales increased by six percent. The bottom line was that profits rose 43 percent to $ 2.8 billion.

The electronics trading holding Ceconomy with its chains Media Markt and Saturn increased sales in the 2020/21 financial year despite the branch closings during the Corona crisis. Thanks to a flourishing online business, the Düsseldorf Holding increased revenues by 2.5 percent to 21.4 billion euros. Online sales grew by 64.9 percent to 6.9 billion euros.

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