market report
As earnings season progresses and the election approaches, US investors have avoided risk. Tech stocks held up better, the leading index Dow Jones fell more significantly.
In New York, too, as before on the stock exchanges in Europe, the red arrows dominated today. However, the indices on the Nasdaq technology exchange held up better and ended up trading moderately higher. The composite index closed 0.27 percent higher, the Nasdaq 100 selection index gained 0.18 percent. The Dow Jones index fell more sharply, falling 0.8 percent to 42,931 points. The S&P 500 fell 0.18 percent to 5,853 points.
After the stock market took a breather today with a manageable calendar, the company reporting season that has already started will continue with great vigor from tomorrow at the latest.
In total, over 100 of the 500 companies in the S&P 500 are presenting quarterly figures this week – including IBM, Tesla and Coca-Cola. Many analysts expect that the numbers could decide the future direction of the US stock market. In view of high expectations for the business figures and forecasts of US companies, investors made price gains here and there.
Investors also remain focused on the US presidential election on November 5th. Current polls point to a neck-and-neck race between Democrat Kamala Harris and Republican Donald Trump. “The uncertainty will most likely last at least until election day,” wrote analysts at the SEB banking group.
The bank UBS also predicted that in the weeks remaining before the elections, the situation on the US stock exchanges could become unpleasant. “The race remains too close to make any predictions about the outcome,” the strategists wrote. The associated uncertainty could cause strong price fluctuations. However, this is offset by a strong economy and healthy company balance sheets.
The prospect of an end to the labor dispute, but also speculation from the Wall Street Journal newspaper about the sale of parts of the company, drove Boeing shares against the trend to the top in the Dow. The paper gained 3.1 percent and closed well below the daily high.
Specifically, the ailing aircraft manufacturer is now offering, among other things, an income increase of 35 percent over a period of four years in the tough labor dispute. The IAM union wants its approximately 33,000 members to vote on the proposal on Wednesday.
The domestic stock markets started the new trading week with losses and were therefore unable to repeat the record run of the previous week. The leading index DAX, which lost even more ground, especially in late business, closed at 19,461 points, close to the day's low and thus 1.0 percent lighter. The daily high was 19,645 points.
On Friday, the index closed 0.38 percent higher at 19,657 points. The MDAX of medium-sized stocks also fell by 0.67 percent to 27,152 points.
After the leading index's recent record run to a peak of 19,674 points, a correction is not unusual, especially from a technical perspective. Nevertheless, investors must be careful that the high valuation level remains fundamentally justified. Therefore, the corporate reporting season, which is now getting underway in this country, is of great importance.
Investors “still have too much respect for the 20,000 mark” and are waiting for impulses, comments Jürgen Molnar from broker RoboMarkets on market events.
The hot phase of the domestic reporting season began with the largest DAX heavyweight SAP on the evening after the US stock market closed. In view of the high valuation, the Walldorf-based software group was under pressure to “deliver” beforehand.
A lot of optimism has already been priced into the current price level and the shares of Europe's largest software manufacturer have accounted for a large part of the overall market development in recent months, according to market expert and stock market expert Andreas Lipkow. With a stock market valuation of just over 246 billion euros, SAP is the biggest heavyweight in the DAX
The figures for the third quarter were overall better than expected, with the share price rising over 3.9 percent to a new record high of $238.50 in an initial reaction after trading in New York. In this country, 218 euros are currently paid, after a Xetra closing of 210.75 euros.
Specifically, in the three months of July to September, earnings before interest and taxes, adjusted for special effects, rose unexpectedly sharply year-on-year by 27 percent to 2.24 billion euros. That was also more than analysts had previously expected. In 2024, SAP is now aiming for a currency-adjusted increase of 20 to 23 percent in this highly regarded key figure. So far, the plan was to increase 17 to 21 percent. The Walldorf-based company is also planning to do more when it comes to overall product sales.
Sales from cloud offerings increased by a quarter in the third quarter, and existing bookings for the next twelve months also continued to rise noticeably. Overall, group sales increased by 9 percent to 8.47 billion euros, and net profit was 13 percent higher at 1.44 billion euros.
Overall, however, UBS expects that global stock markets will continue to benefit from falling interest rates, positive profit growth and possible economic stimulus from China. “AI innovations continue to drive growth, with the US an attractive market,” they emphasized.
The experts at Landesbank Helaba also have a lot of confidence in the stock markets on both sides of the Atlantic: the general mood on the stock market is good, not least in view of the hopes of further interest rate cuts in both the Eurozone and the USA.
The euro remained under pressure in US trading today. The euro continued its recent downward trend after recovering somewhat on Friday. The European common currency last cost 1.0812 dollars. In early European trading it was quoted somewhat higher. The European Central Bank (ECB) set the reference rate at 1.0853 (Friday: 1.0847) dollars.
The euro has already lost around four cents since its high at the end of September. Above all, the prospect of interest rates in the euro area falling perhaps faster than expected is currently putting pressure on the common currency.
It fits into the picture today that German producer prices fell unexpectedly sharply in September. The driving force for the decline remains falling energy prices, which gives the European Central Bank (ECB) greater leeway in its interest rate turnaround.
“The interest rate cut fantasy is now pronounced and with a view to the ECB, another key interest rate cut in December is fully priced in,” says a morning comment from the Landesbank Hessen-Thüringen (Helaba). According to the Helaba experts, recent reports that the central bank expects to achieve the targeted inflation target of two percent in the medium term much earlier than the official projections indicate may have contributed to the interest rate fantasy.
Despite the high interest rate cut fantasy in Europe, the bond market trended weaker. The landmark futures contract Euro-Bund-Future fell by 0.71 percent to 133.24 points in the late afternoon. The yield on ten-year federal bonds rose by 0.10 percentage points to 2.20 percent. Yields rose even more significantly in France, Italy and Spain.
There was no clear reason for the significant price losses. Ultimately, the increased expectations of interest rate cuts suggest rising bond prices. Important economic data from the first series was not published.
According to Commerzbank's assessment, the economic data for the current week and comments from the ECB will be decisive for further developments. The much-watched purchasing managers' indices for the Eurozone are due out on Thursday and the ifo business climate for Germany is due out on Friday.
Bitcoin has been volatile so far. Speculation that Donald Trump would win the US presidential election initially boosted cryptocurrencies, which have since given up their initial gains.
The former US president announced at a campaign event some time ago that he would become a “crypto president” if he won again, which continues to fire the imagination of investors. Bitcoin is currently trading around 2.8 percent lighter, falling slightly below $67,000. However, the largest of all cryptocurrencies remains at a high level.
The price of gold hit a new record high today. The yellow precious metal set a new record at $2,737; most recently around $2,719 was paid. Expectations of interest rate cuts have been giving gold a tailwind for months. Falling interest rates make the precious metal, which itself does not generate any interest, more attractive.
Particularly noteworthy: Gold was able to defy the strong dollar with its new all-time high. A strong dollar makes gold more expensive for non-dollar buyers – which usually weakens demand for the yellow metal.
On the raw materials market, oil prices stabilized after significant losses in the previous week, which were due to demand concerns in China and easing supply fears in the Middle East. The North Sea variety Brent rose in price by 1.5 percent, the US light oil WTI cost 1.8 percent more.
The Infineon share was one of the biggest losers in the DAX and lost around 2.5 percent. The US investment bank Morgan Stanley has downgraded the stock to a neutral rating and has named a new price target of 30 euros, the lowest among the analysis houses. Analyst Lee Simpson pointed to the challenges the chip maker faces in doing business with the automotive industry.
A canceled buy recommendation weighed on Munich Re shares. After they passed the 500 euro mark for the first time in October and reached a record of almost 513 euros a few days ago, analyst Philip Kett from Jefferies sees little scope for rising market expectations and is now voting “Hold”.
Meanwhile, Munich Re is urging primary insurers such as Allianz and Axa to further increase premiums for their customers in view of increasingly expensive claims. At today's industry meeting in Baden-Baden, board member Clarisse Kopf insisted on sharing the risks between reinsurers and primary insurers. Primary insurers should aim for risk-based premiums in their own business.
According to Hannover Re, car owners in Germany will have to dig deeper into their pockets for their vehicle insurance in 2025. The industry is expected to increase its motor vehicle liability tariffs by an average of eight percent next year, the world's third-largest reinsurer announced…