market report
The start of the week on Wall Street was mixed, with nervous trading. New inflation data is eagerly awaited later this week. The DAX also gave up its initial gains.
The US indices today presented a similar picture of indecision as in Germany, with changing signs. The leading index Dow Jones and, to a lesser extent, the broad market S&P 500 index did not really get off the ground, while the technology exchange Nasdaq rose slightly.
Specifically, the Dow lost 0.37 percent to 39,357 points. The S&P 500 closed almost unchanged at 5,344 points. The Nasdaq gained 0.2 percent, as did the Nasdaq 100 index. After a turbulent August so far, investors remained tense ahead of the publication of economic data in the coming days.
In general, the new week will probably be marked by a series of economic data that should provide information about the situation in the world's largest economy. The figures for consumer prices for July on Wednesday are particularly eagerly awaited, which, according to market analyst Jochen Stanzl from the trading house CMC Markets, will be the “next acid test” as they are crucial for the upcoming monetary policy of the US Federal Reserve (Fed).
“Investors will be looking for numbers to be in the sweet spot – cool enough that no one is questioning the likelihood of a rate cut in September, but good enough to put aside the recession worries that have rocked markets recently,” said analyst Chris Larkin at broker E-Trade.
Stock market traders are also keeping an eye on US retail sales on Thursday. Private consumption is considered the mainstay of the world's largest economy. Experts are expecting an increase of 0.3 percent for July compared to the previous month. Stock market traders are also expecting the figures from Walmart and Home Depot due out later this week to provide clues about US consumers' spending habits.
Among the individual stocks, Starbucks caught the eye, gaining a good 2.5 percent. The Wall Street Journal reported that activist investor Starboard Value has acquired a stake in the coffeehouse chain.
AI market leader Nvidia also celebrated a comeback after the turbulence at the beginning of the month. The share price rose by a good four percent to $109.02 at the end. Analyst Timothy Arcuri from UBS is sticking to his buy recommendation with a price target of $150. He estimates that the price drop means that a profit peak in 2025 is priced in. In 2026, however, things will start to pick up again.
The new week got off to a bumpy start on the German stock market with little news. After an initially brisk start with a daily high of 17,892 points, the DAX slipped in its wake and changed signs several times in the afternoon in the wake of an inconsistent Wall Street trend. In the end, the index only recorded a mini-plus of 0.02 percent or around four points to 17,726 points. On Friday, the closing price was 17,722 points.
Last week, the German leading index gained around half a percent, after it had temporarily fallen to its lowest level in almost six months due to renewed fears of a US recession. The MDAX of medium-sized stocks closed at 27,152 points, a loss of 0.4 percent.
Although the DAX statistically reached its fifth consecutive day of gains today, quite a few stock market traders have become cautious after the recent price slide triggered by fears of a US recession. “The general nervousness and uncertainty remains,” wrote analyst Martin Utschneider from Finanzethos. Blind euphoria is not appropriate even after the recent recovery, and investors should still protect themselves against further losses.
In terms of charts, the important former support area at 17,800 points is now at the door as resistance. This mark must be overcome in order to develop new momentum, writes Salah-Eddine Bouhmidi, market expert at IG Markets. Bouhmidi also points to the geopolitical risks in the Middle East and Ukraine: “They can lead to unexpected reactions and skepticism at any time.”
Another factor is seasonality, says Christian Zoller, chart expert at ING: “In the months of August to October, prices are expected to be seasonally weak, which suggests that the stock markets are currently only recovering after the sharp price slump at the beginning of August.”
Wall Street is likely to set the pace in the new trading week, especially as the corporate reporting season is coming to an end. The US inflation data on Wednesday in particular is in focus. Experts expect a moderate increase. Consumer prices are important for the Federal Reserve's monetary policy. The market is firmly expecting a reduction in September anyway, but the question at the moment is whether it will be 50 or 25 basis points.
The topic of a US recession also remains on the agenda, says Jochen Stanzl, market observer at broker CMC Markets: “If investors cannot see from this week's economic data that the US economy is already in a recession, the rally on the stock markets could resume,” says the expert.
The political tensions in the Middle East are giving oil prices a significant boost at the start of the week. A barrel (159 liters) of the North Sea Brent variety for delivery in October cost 82.12 dollars in the evening, a good 3.0 percent more than on Friday. The price of a barrel of the US variety West Texas Intermediate (WTI) recently rose by as much as 3.75 percent to 79.85 dollars.
Concerns about a possible escalation of the Middle East conflict continue to weigh on the supply situation. Israeli Defense Minister Yoav Gallant told his US counterpart Lloyd Austin that Iran's military preparations indicate that the country is preparing for a major attack on Israel.
Aside from geostrategic fears, the oil cartel OPEC lowered its sales forecast for the current year in the afternoon. According to the organization, the uncertainty surrounding the development of the Chinese economy is having an impact on global oil demand this year. OPEC therefore slightly lowered its July forecast on Monday – by 135,000 barrels a day to 2.1 million barrels. Nevertheless, this is still a robust demand that is significantly above the level before the Corona crisis.
The main reason for the slight adjustment of the forecast is the “muted expectations” of growth in oil demand from China, according to the new monthly report from the Vienna-based OPEC. China's economy is still struggling with the effects of the strict Corona restrictions and a serious crisis in the powerful construction sector. Growth in the world's second-largest economy slowed again in the second quarter after the economy grew by 5.3 percent in the first quarter.
After the significant fluctuations of the past week, the euro started the new week with little change. The last price paid in US trading was 1.0931 dollars. The European Central Bank set the reference rate at 1.0925 (Friday: 1.0917) dollars.
The dollar had initially continued to fall significantly against the euro in recent weeks, partly due to concerns that the US economy might weaken, but then recovered over the course of the week.
“The dollar has weakened since the publication of the US labor market report a week ago, but only moderately,” wrote foreign exchange expert Ulrich Leuchtmann of Commerzbank in a morning commentary.
He stressed that the US currency was just as weak as it was at the beginning of June. This shows that the foreign exchange market is by no means pricing in a US recession to an excessive extent. The latest development merely reflects a slightly higher risk of a US recession – no more and no less.
Chemicals distributor Brenntag is cutting its annual targets due to tough competition and price pressure. For the current year, earnings before interest, taxes and goodwill amortization (operating EBITDA) adjusted for special items are expected to fall to between 1.1 and 1.2 billion euros, the DAX company surprisingly announced in the evening after the stock exchange closed in Essen. Until now, the management board had been aiming for the lower end of the range of 1.23 to 1.43 billion euros. With the new targets, Brenntag now expects a decline compared to the previous year's figure.
In recent months – especially in July – competition has become more intense, the company said. “For this reason, Brenntag no longer expects an improvement in gross profit per unit of volume in the second half of the year, but rather a stable development at group level.”
In the second quarter, operating profit (Ebita) fell by a good tenth to 297 million euros. This gives a value for the first half of the year of around 557 million euros, compared to 677 in the previous year. The management board will present the half-year report on Tuesday as planned. In an initial reaction, Brenntag shares lost more than four percent on the Tradegate trading platform.
The arms company Rheinmetall is supplying further battle tanks and recovery tanks to the Czech Republic in a second ring swap. The value of the order from the German federal government is in the lower three-digit million euro range. In exchange for the 14 Leopard 2A4 battle tanks and the 3 Büffel recovery tank supplied by Rheinmetall, the Czech armed forces are to hand over military equipment to support Ukraine. A corresponding agreement was already signed between representatives of both countries and Rheinmetall in Prague at the end of July. The first ring swap procedure took place in October 2022.
The net profit of the world's third-largest reinsurer Hannover Re rose by 21 percent to 1.2 billion euros in the first half of the year, while reinsurance turnover increased by 6.1 percent to 12.9 billion euros after adjusting for currency effects. “We have had a successful first half of the year with significant growth in property and casualty reinsurance and a satisfactory net group profit,” said CEO Jean-Jacques Henchoz.
The company thus continued the series of successful quarterly reports from the insurance sector, which was also appreciated by investors. The stock was at the top of the DAX and gained over five percent.
Porsche SE is buying into Flix. Together with financial investor EQT, Kühne Holding and other partners, the company is securing around 35 percent of the shares in the long-distance bus and rail operator, the Volkswagen major shareholder announced today. Porsche is investing a low double-digit million amount in this. Sustainable and affordable mobility offers have great growth potential, said Lutz Meschke, Member of the Executive Board for Investment Management at Porsche SE.
The energy company RWE has put a pilot plant for the production of green hydrogen into operation in Lingen in the Emsland region. Federal Minister of Economics Robert Habeck (Greens) praised the engineering achievement. “Not only is climate protection being pursued here, industrial policy is also being pursued here,” he said. The plant is an important milestone for the energy transition.
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