Ahead of US Inflation Data: DAX Recovers Some Price Losses

market report

Status: 04/12/2022 1:35 p.m.

The first wave of selling has died down and the DAX has at least regained the 14,000 mark. However, investors will avoid major risks before a major economic event in the United States.

The DAX falls about one percent and is quoted at 14,060 points. The leading German index thus compensates for a large part of the first losses. Yesterday, the DAX lost 0.6% to 14,192 points. “Fear of inflation, war in Ukraine and lockdowns in China – this cocktail of fear is weighing on stock markets today,” comments Salah-Eddine Bouhmidi, market expert at IG Markets.

Wholesale prices herald rising inflation

Inflation is currently the most important topic on the market: fueled by high energy prices, it exceeded the 7% mark in March for the first time since reunification in 1990.

Economy update from 04/12/2022

Stefan Wolff, HR, tagesschau24 9:05 am, April 12, 2022

The Federal Statistical Office published the March wholesale prices today. They increased by an average of 22.6% compared to the same month last year. There has not been a greater increase since the calculations began in 1962. From February to March alone, wholesale prices increased by 6.9% – this is also a record increase .

This development is seen as an indicator of future inflationary trends, as wholesalers are the link between manufacturers and end customers, and higher costs usually end up trickling down to consumers. Therefore, the focus is on the monetary policy of the European Central Bank (ECB), which will announce its monetary policy decisions on Thursday. There are growing expectations that he may raise interest rates this year given high inflation.

Tension ahead of US consumer prices

Central banks must now get high inflation under control, according to Desiree Sauer, market analyst at Lazard Asset Management. “But they are walking a fine line, as rising prices combined with tight monetary policy could slow demand and therefore growth,” she summarizes the factors central banks need to consider in their assessment.

Investors will know what the situation is in the United States at 2:30 p.m. when the US consumer prices are released: “They should have risen further to reach a 40-year high in March,” Helaba experts predict. In this regard, the US Federal Reserve will see its intention to raise its key rate several times this year confirmed. “It remains to be seen whether interest rate expectations, which are already ambitious, will be pushed further,” experts say.

ZEW fell again

The current ZEW index also shows that financial market participants are critical of the situation. The mood barometer fell 1.7 points to minus 41.0 points in April from the previous month, according to the European Center for Economic Research (ZEW). In March, the indicator collapsed at record speed due to the war in Ukraine.

“Experts assume that the current economic situation is bad and will continue to deteriorate,” commented ZEW President Achim Wambach.

Oil prices are on the rise again

Oil prices are offsetting some of their steep declines the day before. A barrel (159 liters) of Brent from the North Sea costs more than 100 dollars. The price per barrel of the American variety West Texas Intermediate (WTI) soared to over $96.

“The release of strategic oil reserves and concerns about demand remain the main issues in the market. In this regard, it is also the small relaxation of strict lockdown measures in Shanghai that has boosted prices again,” comments Commerzbank expert Barbara Lambrecht. An oil embargo is also still under discussion.

According to the OPEC oil cartel, it sees no possibility of completely closing the gap in oil supply through its own deliveries – if it has any interest in doing so.

Bitcoin falls below $40,000

Bitcoin and other cryptocurrencies are under pressure again. The price of the digital currency on the Bitfinex trading platform fell about 5% to $39,223, its lowest level in almost a month. Other digital stocks also fell. Prices recovered somewhat in the morning.

Rising interest rates are weighing on interest-free investments such as crypto-assets. On the other hand, digital currencies, considered particularly risky, often evolve with the evolution of stock market prices.

Trust at Easyjet

The easing of the Europe-wide corona virus is making British airline Easyjet optimistic about a further travel revival. In March, the airline had already offered 80% of its pre-corona capacity, the Ryanair competitor announced. “We remain confident in our plans that this summer we will achieve flight availability close to 2019 levels,” said Easyjet CEO Johan Lundgren. However, customers continued to book at short notice ahead of the scheduled departure.

Choco, the new unicorn

After its latest funding round, the Berlin food ordering platform Choco is one of the “unicorns” among German startups. The company, founded in 2018 by Daniel Khachab and Julian Hammer, said €102 million had been raised for growth. This places the valuation of the company at 1.2 billion euros and therefore above the billion mark above which one speaks of a unicorn in the jargon of investment bankers.

Important payments to Evotec

Hamburg-based biotech company Evotec made strong progress last year thanks to higher milestone payments from its partnerships. Sales increased by 23% to 618 million euros in 2021. Evotec benefited from more than double the milestone payments compared to the previous year and from good underlying activity. On the other hand, the headwind came from negative currency effects. Adjusted operating profit (Ebitda) increased by 1% to 107 million euros despite higher research expenses.

Dermapharm increases its dividend

Dermapharm wants to pay its shareholders a lot more after a jump in profits last year. The dividend is increased to EUR 2.17 per share. A year earlier, the drugmaker had paid 0.88 euros. Profit fell from 85.9 million euros the previous year to 208.9 million.

Placement of Commerzbank and Deutsche Bank shares

A major investor reduced its stake in Commerzbank and Deutsche Bank. In the case of the first institute, it is about 72.5 million articles and in the case of the latter about 116 million actions. The name of the seller has not yet been disclosed.

Shares of Deutsche Bank and Commerzbank then came under pressure.

Nokia bids farewell to Russia

Finnish network provider Nokia no longer wants to do business in Russia because of the Russian invasion of Ukraine. Nokia is pulling out of the market, company boss Pekka Lundmark has said. It’s the only option. “We just don’t see a way to continue in the country under the current circumstances,” Lundmark said. The group is thus going a step further than its Swedish competitor Ericsson, which has announced that it will suspend all of its activities in Russia indefinitely.

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