Saturday, November 27

A friendly start to the week: DAX trend remains positive

Market report

Status: 01.11.2021 7:52 a.m.

Experts expect the German benchmark index to start the new trading week with a tailwind. The record high remains close, but there are also mood dampers.

The broker IG valued the German benchmark index around 0.4 percent higher to 15,745 points before trading began. The record high of August at 16,030 points remains in the sights after the damper quickly attracted buyers again at 15,500 points on Friday through disappointing quarterly reports from Amazon and Apple.

Corona worries again

However, analysts are starting to worry again about the rapidly increasing number of corona infections. With the onset of cooler weather, the pandemic picked up again noticeably, wrote economist Christoph Weil from Commerzbank. Politicians will probably react to this with new restrictions, despite the likely lower burden on the health system.

“But even where there are no restrictions, the economy will suffer. For fear of infection, many people will voluntarily restrict their contacts,” said Weil. This will leave its mark on private consumption. Further interruptions in production are possible, so that the material shortages are likely to last longer. The consequences are less growth and more inflation.

How is the mood in China?

But the reporting season, which has been largely successful so far, also remains a key factor. In the middle of the week, the car manufacturer BMW, the online fashion retailer Zalando and the genetic diagnostics company Qiagen report on the latest business developments. Investors can expect a particularly hot day of the balance sheet season on Thursday – with business figures from the Vonovia housing group, the chemicals trader Brenntag as well as Heidelbergcement, Deutsche Post and the medical technology manufacturer Siemens Healthineers.

Meanwhile, electricity shortages and rising commodity prices weighed on the sentiment of large state-owned industrial companies in China in October. The state purchasing managers’ index for industry fell from 49.6 points in the previous month to 49.2 points. Economists, however, had expected a slight recovery. The index value thus remains below the expansion threshold of 50 points, which indicates a contraction in economic activity.

The index recorded by the business magazine “Caixin” for the mood in small and medium-sized industrial companies, however, provided some relief. The purchasing managers’ index rose surprisingly and was well above the so-called expansion threshold. It thus provided a different picture than the state index for the large and state-dominated companies.

The winning streak continued on Wall Street last Friday. The Dow Jones gained 0.3 percent to 35,819.56 points. The tech-heavy Nasdaq advanced 0.3 percent to 15,498.39 points and the broad S&P 500 gained 0.2 percent to 4,605.38 points.

The disappointing business figures from Amazon and Apple had put some pressure on the mood. “The reason everyone looks at Apple and Amazon is because they are weighty and weaken the Nasdaq, but it definitely won’t affect sentiment much about strong corporate balance sheets,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. On the positive side, US consumers are still in the mood to buy, as shown by data on consumer spending.

The interest rate meeting of the US Federal Reserve (Fed) on Wednesday is causing tension in the markets: Experts expect a decision at the interest rate meeting to gradually reduce the dose of crisis aid, which currently amounts to 120 billion dollars per month. That would mean a turnaround in monetary policy, which has already sparked speculation in the financial markets about an interest rate hike next year.

For Deutsche Bank CEO Christian Sewing, the rise in inflation rates is not just a temporary phenomenon. “You have to imagine it like a multi-storey house: We have now reached a higher floor, and we will stay there for the time being,” Sewing told the “Frankfurter Allgemeine Sonntagszeitung”. Now the central banks are called upon not to let developments get out of hand. “You have to find the way out of your very loose monetary policy. Better sooner than later,” Sewing told the newspaper.

Inflation has been increasing for months, mainly due to the sharp rise in energy prices. In October consumer prices rose by 4.1 percent compared to the same month last year in the countries with the euro currency, which is the highest value since mid-2008.

The Irish low-cost airline has been in the black for the first time since the beginning of the Corona crisis in a quarter. Ryanair reported a loss of 48 million euros for the first six months. Since the deficit in the first quarter was € 273 million, the result for the second quarter (until the end of September) is a profit of € 225 million. Bookings for the autumn and Christmas holidays have picked up again, explained Ryanair. For the full year, however, the group continues to expect a loss of 100 to 200 million euros because it has to offer tickets at a discount to fill its planes.

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