Stock exchanges turn negative: Not a good day for shareholders

market report

Status: 03/01/2023 10:15 p.m

Fears of inflation and interest rates currently have the stock markets firmly in their grip. Bonds have now become a real alternative to stocks again.

Recently, the rising interest rate environment has had an increasingly clear impact on the bond markets. In the middle of the week, the yield on ten-year US government bonds rose above the four percent mark for the first time since November. That’s twice the average dividend yield in the S&P 500 stock index, wrote Seema Shah, strategist at Principal Asset Management. So bonds have once again become a serious alternative to stocks. This has added to the stock markets in New York. The Dow Jones was hardly able to break away from the zero line over the course of the day and ended trading practically unchanged with a plus of 0.02 percent.

The more interest rate-sensitive technology stocks were hit even harder. The Nasdaq 100 index lost 0.86 percent.

The day’s economic data failed to lift sentiment either. US industry hardly slowed down its slide in February. The purchasing managers’ index for the sector rose only 0.3 points from the previous month to 47.7 points. Experts surveyed by the Reuters news agency had expected a stronger increase to 48.0 points. In addition, the construction sector performed surprisingly poorly in January. Construction spending fell by 0.1 percent on the previous month, experts had expected plus 0.2 percent. The US construction sector has been weighed down by a number of developments for some time, including the sharp rise in mortgage rates.

DAX slips after inflation data

On the German market, where the yield on ten-year Bunds rose to 2.72 percent for the first time since 2011, the most important event was the current inflation data. Economists had actually assumed that the inflation rate had fallen again somewhat in February. At 8.7 percent compared to the same month last year, however, it remained at the high level of January. The DAX promptly had to give up its daily gains and ended up trading 0.4 percent lower.

With inflation stubbornly high, it is clear that the European Central Bank (ECB) must continue to act. After five increases in a row since July, the key interest rate in the euro area is now 3.0 percent. Another rate hike of 0.5 point is expected for the March 16 meeting – but that won’t be the end of the uptrend.

On the other hand, positive signals for the stock markets came from China. The Chinese economy is apparently on the upswing after the end of the strict corona measures. The official purchasing managers’ index for industry rose significantly more sharply in February compared to the previous month than expected by most analysts; it climbed to its highest level in more than a decade.

Oil prices are picking up again

Oil prices rose again more sharply in the evening. The price for the North Sea variety Brent was 0.1 percent higher late in the evening at $84 a barrel. The positive economic signals from China outweighed the still high oil reserves in the USA. These rose by 1.2 million barrels (159 liters) to 480.2 million barrels in the past week. This is the tenth week of growth in a row. Daily oil production remained at 12.3 million barrels.

Euro extends gains against dollar

The European single currency was able to further expand its gains against the dollar. Late in the evening, the euro was up 0.8 percent at $1.0660. A troy ounce of gold cost $1838.40 late in the evening, 0.7 percent more than the previous evening.

Tesla will “Model Y” ummodeln

Tesla apparently wants to comprehensively revise its bestseller “Model Y”. The changes, which would go by the project name “Juniper,” would affect both the interior and exterior of the SUV, two people familiar with the process told Reuters. Tesla wanted to inform investors about its plans on Wednesday. Tesla boss Elon Musk has announced that he will present the third part of his “master plan”.

IT giant Fujitsu bids for GK Software

On the German stock market, the GK Software share caught the eye with a jump in price of around 30 percent. The Saxon company is about to be sold to the Japanese IT giant Fujitsu. The Japanese are offering 432 million euros for the company from Schöneck in Vogtland and have already secured almost 41 percent of the shares from the two company founders Rainer Gläß and Stephan Kronmüller. At EUR 190 per share, the offer is almost a third higher than the Xetra closing price of EUR 145 on Tuesday.

Siemens spins off engine business

As announced, Siemens is spinning off its business with engines and large drives under the name Innomotics. The new company is to be legally independent from July 1, but will initially remain a 100 percent Siemens subsidiary. The operational headquarters of the new company with 14,000 employees and a turnover of around three billion euros will be in Nuremberg. In the new company, Siemens combines its business activities with low to high-voltage motors, geared motors, medium-voltage converters and motor spindles.

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Siemens Energy asked for analyst praise

The biggest DAX winner was Siemens Energy, another spin-off from the industrial group. The US bank JPMorgan has resumed the rating of the paper at the price target of 25 euros with “Overweight”. Analyst Akash Gupta praised Siemens Gamesa’s withdrawal from the stock exchange as an important step towards a simplified corporate structure.

Beiersdorf defies high costs

Despite higher costs, Beiersdorf had one of the best fiscal years in its recent history. With sales growing organically by a good ten percent to EUR 8.8 billion, the Nivea manufacturer increased its operating result before special items by almost a fifth to around EUR 1.2 billion in 2022. In Europe, 70 percent of the growth in the cosmetics business was due to higher prices and about 30 percent to higher sales volume, explained CFO Astrid Hermann. The disappointment that the dividend should remain unchanged at EUR 0.70, as in previous years, was put up by the stock market over the course of the year.

Post with problems in fulfilling the branch network obligation

Deutsche Post still has too few post offices in rural areas. As can be seen from a letter from the Federal Network Agency to its advisory board, the supervisory authority was aware of 174 locations in Germany at the end of January that were not occupied despite a government regulation.

Puma throttles expectations for 2023 after a record year

Sporting goods manufacturer Puma had a record year in 2022. Sales increased by 18.9 percent to 8.465 billion euros and consolidated profit by 14.2 percent to 354 million euros. However, the new CEO Arne Freundt lowered expectations for the current year. Earnings before interest and taxes (EBIT) are expected to be around the previous year’s level at EUR 590 to 670 million.

ProSiebenSat.1 postpones annual and consolidated financial statements

The ProSiebenSat.1 share was one of the biggest losers in the MDAX. The television group is postponing the presentation of the annual and consolidated financial statements and possibly also the general meeting at short notice. The reason for this is regulatory issues in connection with the business of Jochen Schweizer mydays, as the MDAX group surprisingly announced the previous evening in Unterföhring.

Aston Martin expects better business

The British sports car manufacturer Aston Martin wants to improve after the meager past financial year. In addition to improved profitability, the company is aiming for positive free cash flow in the second half of the year because deliveries of the new generation of sports cars will begin in the third quarter, the cult brand known from the James Bond films said. The shares are up more than 20 percent at the top.

Price increases drive Reckitt Benckiser revenues

The British consumer goods group Reckitt Benckiser increased its sales surprisingly strongly in the past year, despite the reluctance of customers to buy. Noticeable price increases more than made up for the decline in sales. Revenues increased on a comparable basis and adjusted for exchange rate effects by 7.6 percent to almost 14.6 billion pounds (16.6 billion euros).

Euronext does not want to buy Allfunds after all

The Paris multi-country stock exchange Euronext has withdrawn its multi-billion dollar takeover bid for the Madrid-based technology company Allfunds. Allfunds shares then crashed, Euronext titles rose. Analysts from various houses reacted with relief. The transaction raised questions. Citigroup analyst Andrew Coombs referred to a lack of synergies and the weak contribution to earnings.

Amazon closes logistics center Brieselang near Berlin

The world’s largest online mail order company Amazon has announced the closure of a large logistics center in Germany for the first time. The US group wants to close the location in Brieselang near Berlin, as a company spokesman confirmed on request. This was communicated to the employees. The Correctiv research team had previously reported on this.

Lawsuit against Total Pipeline in East Africa dismissed

Environmental and human rights organizations have failed in a lawsuit against French energy giant Total over a controversial pipeline project in East Africa. A Paris court dismissed the lawsuit yesterday. The organizations had put forward arguments in the negotiation that differed too much from the initial demands.

Belgium plans to divest BNP shares

The Belgian state is apparently significantly reducing its stake in the French bank BNP Paribas. The government-owned investment company SFPI-FPIM wants to sell 33.3 million shares, the news agency Bloomberg reported yesterday, citing documents it had. This corresponds to a value of around 2.2 billion euros.

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