No recovery in interest rates: the ECB weakens the euro and strengthens stocks


market report

Status: 04/14/2022 10:30 p.m.

Because the ECB is still delaying an interest rate recovery, the euro fell to a two-year low ahead of Easter. This pushed the DAX higher. Wall Street, on the other hand, started the long weekend weaker.

In the stock markets, there was only meager food during Holy Week. Wall Street remained largely stationary. On Maundy Thursday, the Dow Jones fell slightly by 0.3%. The broad S&P 500 lost 1.2% to 4,392 points. Technology stocks in particular were avoided. The tech-heavy Nasdaq index lost more than two percent. “There are hardly any private investors or professional investors going into the tech space anymore,” said portfolio manager Robert Pavlik of Dakota Wealth Management. “It’s the traders and the algorithms that profit from daily price swings, and that’s why there are these moves in tech stocks.”

DAX ends three-day negative streak

The DAX also had to lose some feathers during Holy Week. After all, it closed Thursday up 0.6%, ending a three-day losing streak. Prior to the ECB interest rate meeting, Germany’s leading index languished without direction.

The ECB is not moving

The hesitant attitude of the European Central Bank (ECB) with regard to an interest rate hike, demanded by many, relieved the German stock market. Despite mounting political and business pressure, European currency watchdogs are sticking to their zero interest rate policy for now. ECB President Christine Lagarde said after the monetary policy meeting in Frankfurt that interest rates would not be raised until some time after the end of securities purchases. “A while” could mean a few weeks or even several months. This issue will be addressed as appropriate.

“ECB still postpones interest rate hike”, Klaus-Rainer Jackisch, HR

tagesschau24 4:00 PM, April 14, 2022

End of bond purchases in the third quarter

After all, Lagarde has signaled that the times for multi-billion dollar bond purchases are running out and will “most likely” end this summer. The ECB has designated the third quarter as the time to end bond purchases. When it might be in the neighborhood stayed open. “It could be early, it could be late,” the ECB chief said.

“The ECB is not serious about anti-inflation!

Economists reacted visibly disappointed to vague statements from monetary watchdogs. Otmar Lang, chief economist at Targobank, complained that it was actually an intolerable situation that the ECB left interest rates unchanged and that with inflation rates close to eight percent. The ECB is in dire need of salvation and should follow the Fed’s approach, he wrote. Economist Alexander Krüger of Hauck Aufhäuser Lampe also criticized the wavering course of the monetary authorities. “It still doesn’t look like the ECB is starting a serious fight against inflation,” he said. keys” are imminent.

Economy Update from April 14, 2022

Stefan Wolff, HR, tagesschau24 9:05 AM, April 14, 2022

EUR at two-year low

The euro was put under pressure given the wait-and-see attitude of the ECB. The common European currency fell below US$1.08 for the first time in about two years. In the evening, one euro at the modest price of 1.0758 US dollars. This is the lowest level since April 2020. As of midday, it was trading above $1.09.

Oil prices continue to rise

Meanwhile, swings in the oil market continue: the price of Brent North Sea crude rose 1.7% to $110.69 a barrel, while US light oil was around $1.5 % more at $105.78. Traders point to a New York Times report that the EU may gradually introduce a ban on Russian oil imports. Over the past two trading days, among other things, concerns about supply bottlenecks due to Western sanctions on Russia have pushed WTI and Brent prices up around 10%.

Shadow and light in bank balance sheets

The big US banks Morgan Stanley, Citigroup and Goldman Sachs recorded declining profits at the start of the year. However, they performed slightly better than analysts feared. The shares gained as much as 3.2%. Wells Fargo’s profit slump, on the other hand, has alienated investors. Stocks fell more than five percent. “The banks reflect some of the concerns investors have with the broader market,” said Rick Meckler, partner at wealth manager Cherry Lane Investments. “Inflation helped them on the revenue side, but hurt them on the cost side.”

Tesla boss wants to buy Twitter

Elon Musk’s takeover bid for Twitter caused a stir today. Tesla CEO is offering $54.20 in cash per Twitter share. That’s 54% more than the stock cost on Jan. 28, the day before Musk started investing in Twitter. Investors doubt the success of the operation. Shares of the short message service temporarily jumped almost seven percent to around US$49, but then closed in the red. Tesla shares lost about three percent.

Tech billionaire Elon Musk himself doubts his attempted hostile takeover of Twitter will succeed. “I’m not sure I can buy it,” admitted the boss of electric car maker Tesla at a conference in the evening. However, the 50-year-old stressed that he has the necessary funds to complete the $40 billion deal.

Rise in profits at Volkswagen

The Volkswagen automobile group surprised with a profit of several billion in the first quarter. Earnings before interest and taxes and before exceptional items related to the diesel business amounted to 8.5 billion euros. However, the automaker’s sales declined. The outlook was also very cautious. Investors sold the shares. VW stocks lost a good two percent.

Delivery Hero price continues to drop

Delivery Hero shares fell to their lowest level in three years today. Since the beginning of the year, they have lost around 70%. Bank of America (BofA) abandoned its neutral position and is now voting “underperformance” with a price target of 33 euros. Bank experts see consumer confidence deteriorating and believe Delivery and Just Eat’s balance sheets are stretched.

Bad predictions from Drägerwerk

Drägerwerk descended even lower. In view of a more cautious annual forecast, the medical technology maker’s shares in the SDax fell 4.6%, marking their lowest point in two and a half years. The company initially sticks to its outlook. However, due to increasing difficulties in the supply of electronic components, Drägerwerk now expects to only reach the lower end of the forecast range.

Benetton and Blackstone bid for Atlantia

In the fight for the Italian infrastructure group Atlantia, the Benetton family, associated with the financial investor Blackstone, submitted an offer of around 12.7 billion euros. They want to outdo Spanish property developer Florentino Perez and his ACS group. The offer provides for 23 euros per share. The Atlantia group, in which the Benetton family holds 33%, is valued at nearly 19 billion euros. The tussle over Atlanta could also affect Germany’s largest construction company, Hochtief – Atlantia and ACS are involved.

Ericsson fears a fine

The Swedish network provider fears a fine from the American authorities for possible bribes to Iraqi militias. “Resolving these issues could result in a series of actions from the US Department of Justice and likely involve additional cash payments,” CEO Borje Ekholm said. The amount of the fine cannot be estimated. Ericsson also announced a drop in its quarterly operating profit to 4.7 billion SEK (455 million euros).

Hermès: luxury and leather bags are still popular

Strong demand for leather and fashion bags pushed luxury goods maker Hermès into the first quarter. Compared to the same period of the previous year, revenues increased by a third to approximately 2.8 billion euros. Hermès benefited above all from robust demand in America and Europe, with growth rates of more than 40%.

Green light for Valneva vaccine

Britain was the first country to give the green light to the corona vaccine from the French pharmaceutical company Valneva. The responsible supervisory authority MHRA has approved the application for people between the ages of 18 and 50. This means that a total of six corona virus vaccines have now been approved in Britain.

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