Market report: DAX in the slipstream of Wall Street

market report

Status: 02/01/2022 08:37 a.m

Banks and market observers expect the DAX to expand on Monday’s gains. But this week’s ECB interest rate meeting is likely to provide some restraint.

Before the start of Xetra, the broker IG valued the DAX 0.4 percent higher at 15,533 points. On Monday, the leading German index rose almost one percent to 15,471 points. Despite the rise at the end of the month, the DAX lost 2.6 percent in January after just missing its November record of 16,290 points at the beginning of the year.

However, restraint is likely to be the order of the day, because a few weeks before the foreseeable turnaround in interest rates in the USA, the ECB Council will chart the further course of monetary policy on Thursday. The Bank of England is expected to raise interest rates again this week. Investors fear that loose monetary policy could also come to an end in Europe. This is a drag on the stock market as bonds would once again become an investment alternative for investors.

Market observers at Helaba are forecasting that the ECB will have a hard time explaining itself at the council meeting. “While a gradual decline in inflation remains likely, price pressure seems to be lasting longer than first thought,” they write in their daily comment. According to current data, inflation in Germany is declining, but less than forecast.

Price rally on the Nasdaq

Wall Street’s specifications are inviting. The tech-heavy select index Nasdaq 100 jumped 3.3 percent to 14,930.05 points. On a monthly basis, however, it fell by almost nine percent. In view of the expected rate hikes by the US Federal Reserve, experts assumed that technology stocks would remain under pressure.

The S&P 500 rose 1.9 percent to 4515.55 points. The leading index Dow Jones went up 1.2 percent to 35,131.86 points. For January, however, there is a minus of 3.32 percent.

Capital market strategist Jürgen Molnar from the trading house Robomarkets comments that investors will likely continue to focus on the development of inflation in the coming weeks. The pace of the US Federal Reserve’s monetary policy change depends on it.

In Japan, the Nikkei closed 0.3 percent higher. Otherwise, several markets in the region remain closed for the Chinese New Year holiday.

What will the Fed do?

Meanwhile, Fed Governor Raphael Bostic expressed skepticism about a rate hike by the US Federal Reserve by half a percentage point. Such a move in March “is not my preferred monetary policy measure,” the district chief said. He envisioned three raises and March seems like the right time to start.

Some analysts haven’t ruled out a half-point hike. This would be an unusual move for the Fed, last seen in May 2000. The key rate is currently in a range of zero to 0.25 percent.

Boeing receives major order from Qatar Airways

Qatar Airways is in a clinch with Airbus, and the Arab airline is now placing orders on a large scale with US rival Boeing. The companies signed a contract to purchase up to 102 machines. According to Boeing, the package includes 50 cargo versions of the new 777X wide-body aircraft and two machines from the current model series. In addition, the airline has concluded preliminary purchase agreements with the US group for 25 medium-haul 737 Max jets and options for a further 25.

According to list prices, the deal could reach a volume of 34 billion US dollars (30.3 billion euros). However, heavy discounts are common for orders of this magnitude. Also, only 34 of the 777X Freighters are firm purchase agreements.

HeidelCement surprises with jump in profits

The HeidelbergCement building materials group increased its operating result last year more than analysts had expected. The result from ongoing business operations increased by twelve percent to 2.6 billion euros. Due to the flourishing construction industry, HeidelCement had already expected a strong increase in operating profits, but the level of growth surprised the analysts: According to data from the forecasting company Vara Research, the capital market only expected 2.5 billion euros.

The reason for the deviation is that the fourth quarter went better than expected, in which the operating result did not fall as experts had estimated, but increased by two percent to 661 million euros.

Siltronic takeover by Globalwafers collapsed

The Taiwanese chip supplier Globalwafers cannot take over the Munich electronics company Siltronic. The legal deadline for this ended on Tuesday night at midnight without the Federal Ministry for Economic Affairs and Climate Protection having granted the necessary approval. According to the ministry, there was not enough time for this.

Sony counters Microsoft

After Microsoft went out to buy the makers of “Call of Duty”, Sony countered with its own takeover plan. The Playstation provider wants to swallow the Bungie studio, which developed games like “Halo” and “Destiny”. The deal is worth a total of $3.6 billion (€3.2 billion), the companies said.

Sony is spending significantly less money than Microsoft: The Xbox group wants the game company Activision Blizzard to spend a total of 68.7 billion dollars. In addition to “Call of Duty”, Activision Blizzard also comes with “World of Warcraft”, “Diablo” and the smartphone game “Candy Crush”.

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