Market Report
After the recent price decline, the DAX is starting a new week with a clear recovery. Investors are expecting an upcoming rate cut in the Eurozone and the US. However, the market is still technically struggling.
After a 3.2% drop in prices in the first week of September, the DAX stabilized as the new week began. It was up 0.7% in the afternoon at 18,434 points.
After all, the market is facing two important rate cuts. It is a given that the European Central Bank (ECB) will cut its benchmark interest rate by 0.25 percentage points this Thursday.
It is also assessed that there is a high possibility that the US Federal Reserve will make its first interest rate cut next week. The only thing that is currently being debated is whether the interest rate hike will be a small increase or a large increase of 0.5 percentage points.
But the much more important question for investors is how much of the widely expected rate cut is already priced in. Especially since prices are not expected to continue to rise due to seasonal factors. Statistically, September is a very weak month for stocks, even in a year when the US President is elected.
Jörg Scherer, head of technical analysis at HSBC, recalls that the average DAX loss in September was 6.1%. Even in a good year for stocks, the decline is still 3.8%.
There is a rare phenomenon in the current stock market that requires attention. The so-called ‘Hindenburg sign’ appeared again on the New York Stock Exchange on Friday. As Robert Rethfeld, a market expert at Wellenreiter-Invest, emphasized, this was the second sign this quarter. The first occurred on July 9. This rare technical chart signal always occurs when there is a lack of market breadth in an uptrend. This is considered a harbinger of a major market upheaval, but the lead time can be long.
The New York stock market also started the week with a significant increase, reacting to last week’s heavy losses. The Dow Jones Industrial Average is now up nearly 1%.
Tech stocks on the Nasdaq rose about 1%. Last week, the Dow Jones posted its biggest weekly loss since March 2023, while the Nasdaq also posted its biggest weekly loss since January 2022.
The euro was still under pressure earlier this week. The common currency was trading 0.4% lower at $1.1046 in the afternoon. The ECB last set its benchmark interest rate at $1.1103 on Friday afternoon. Gold is trading sideways at $2,499 a troy ounce.
In commodities markets, oil prices are again under pressure after a brief rebound last week following an 11-month weekly loss amid persistent concerns about global demand. North Sea Brent crude is currently at $71.24 a barrel (159 litres), 0.3% lower than Friday.
Apple is set to unveil its latest generation of smartphones at its annual company presentation today (from 7pm CEST). As in previous years, experts expect the iPhone 16 to feature faster processors and improved cameras. However, they disagree on whether Apple will raise the price of its revenue-generating products again due to the slew of new AI features.
Google’s parent company, Alphabet, faces another antitrust trial in the U.S. today that could lead to a breakup. Plaintiffs accuse Google of blocking competitors in online advertising and discriminating against website operators. In August, another court ruled that Google had an “unlawful monopoly” in online search. There, too, a breakup is being discussed.
Adidas shares in the DAX are down more than 3%, under pressure from the positive market trend, and are by far the biggest loser. The background is negative analyst opinions. Wendy Liu, an analyst at the British investment bank Barclays, expects that demand for sports goods manufacturers in China will continue to be weak. Therefore, she downgraded Adidas from “overweight” to “equal weight.”
At the annual industry conference in Monte Carlo, representatives from global market leaders Munich Re, Swiss Re and Hannover Re called on companies such as Allianz, Axa and Generali to charge premiums appropriately for high-risk exposures such as natural disasters, liability lawsuits and cyberattacks. But the recent strong price increases appear set to end soon.
Meanwhile, Hannover Re, the world’s third-largest reinsurer, reported in Monte Carlo that German car insurance will also be in the red in 2024. This means that further price increases are expected in 2025, according to the DAX Group.
Luxury house LVMH has appointed British designer Sarah Burton as the new creative director of Givenchy. Burton, who spent nearly three decades at LVMH rival Kering’s Alexander McQueen label, will present her first collection for Givenchy in March 2025. The fashion designer designed Princess Kate’s wedding dress in 2011.
Boeing, the loss-making aircraft manufacturer, promised its 32,000-plus-worker union a 25 percent pay rise days before a strike, a deal Airbus rivals announced Sunday. The IAM union had initially demanded a 40 percent increase. The pay raises and other improvements, including 12 weeks of parental leave, must be applied for four years.
Information from Angela Göpfert of the ARD Finance Editorial Team.
