Frankfurt Do companies’ profits justify the high valuations of the stocks? There will be a lot of new answers to this question in the week from Monday.
The housing giant will lay down on Tuesday Vonovia and the semiconductor specialist Infineon Numbers ahead.
Half-time workers have recently been so scarce that production has been slowed in some car companies, and the industry is also an early indicator of the economy. In the next few days, heavyweights across several sectors of the German share index (Dax) will follow: Siemens Energy and German postal service on Wednesday, Fresenius and FMC as well as Conti, VW, HeidelbergCement, Henkel and Munich Re on Thursday. Close on Friday Siemens, BMW and Adidas then the week off.
In the USA there are still some well-known names such as Pfizer and General Motors. But many companies have already reported, including the big tech stocks like Amazon, Apple and alphabet. Interesting: According to the Reuters news agency, 87 percent of the quarterly profits there have so far been above analyst estimates, which was the highest rate since 1994.
In Europe, where roughly a third of the companies in the Stoxx 600 index reported the second quarter, the rate of surprisingly high earnings in the first quarter was higher than usual at 71 percent. In short, investors have high expectations of profits, and profits themselves are mostly gratifying, but investors are still cautious.
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The coming week will continue to be determined by three factors: the hope of an opening of the economy after the end of the corona pandemic, the still rich business of US tech stocks and at the same time worries that these tech stocks in particular are already rated far too high.
The word “bubble” is booming again. An evaluation by the US bank comes along JP Morgan of around 50 price bubbles in the last 40 years to the conclusion that in 80 percent of cases after a bubble burst, the old price level was soon reached again.
It depends on the Fed
In the background, the central banks in particular play the decisive role. Ultimately, the Fed in the USA provides the decisive impetus for all stock exchanges. It has a major impact on whether price bubbles burst or not. Many experts expect that in the second half of the year there will be more discussions about a possible cutback in bond purchases by the Fed.
That could move the yields on ten-year US government bonds back towards two percent, currently they are a little over 1.6 percent. If this rise in yields is accompanied by strong growth in the US economy, it does not have to create a headwind for the American stock market, which ultimately sets the direction worldwide.
Yields in Europe have also risen since the beginning of the year, but are still in the red at minus 0.2 for ten-year Bunds. However, the European Central Bank (ECB) may have to provide more information on its course in June, especially when it could return to normal monetary policy from crisis mode.
The past week ended a bit listless. The Dax was just below zero at the close of trading on Friday, the Eurostoxx 50 for the most important values in the euro zone was almost minus 0.6 percent. The Nasdaq tech stock exchange in the US ended at almost 0.8 percent, the broad stock index S&P 500 with minus 0.7 and the traditional Dow Jones index with minus 0.5 percent. A familiar picture emerged: the traditional stocks that were supposed to benefit more from the economic recovery performed better than tech stocks that were already highly valued.
Surprises at the banks
With an increase of almost six percent at times, it was MTU leader in the Dax on Friday. The main reason for this was that there was apparently a favorable agreement for MTU about which companies should supply and maintain the engines for the future European fighter aircraft.
The shares of Astra-Zeneca did noticeably well on Friday with a price increase of over four percent after the pharmaceutical company had presented solid figures. The British bank, on the other hand, performed surprisingly poorly Barclays with a price loss of around seven percent: It increased profits, but according to the taste of the analysts, costs were too high. The major Spanish bank BBVA on the other hand, was rewarded with a significant price increase through its surprisingly good numbers.
More: It is true that Fed Chairman Powell is straining the patience of the markets