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Thursday, May 19, 2022

Dax clearly in the red: the conflict in Ukraine and the ECB

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Frankfurt Stock Exchange
Dax clearly in the red: the conflict in Ukraine and the ECB

After the strong recovery of the previous day, the German stock market turned back again on Thursday.

In addition to dashed hopes of progress in ending the Ukraine war, statements from the European Central Bank (ECB) also influenced the mood. A meeting between Ukrainian Foreign Minister Dmytro Kuleba and his Russian colleague Sergei Lavrov in Turkey did not bring the two sides any significant rapprochement. Despite the new risks for the economy, the ECB is heading towards the end of its ultra-loose monetary policy.

The Dax closed down 2.93 percent at 13,442.10 points. By midweek it had staged a brilliant recovery rally and was up eight percent. The MDax of midsize companies lost 1.92 percent on Thursday to 29,465.89 points.

There were also significant losses in the other leading European stock markets. The euro zone’s leading index, the EuroStoxx 50, fell 3.04 percent to 3,651.39 points. The leading Paris index lost 2.8 percent and London’s FTSE 100 fell 1.3 percent. In the US, the Dow Jones Industrial Average fell 1.2 percent at the close of trading in Europe.

The ECB is cutting back on its multibillion-dollar bond purchases ahead of schedule and has announced that they will end in the summer. In view of the new uncertainties for the economy caused by the conflict in Ukraine, several economists expected the ECB to wait and watch.

Bank stocks were able to contain their losses somewhat after the ECB’s statements. Commerzbank lost 3.7 percent on the MDax, while Deutsche Bank lost just 0.7 percent on the Dax. The latter had announced that its risks in the Russian business were manageable in view of the Ukraine conflict. He also set higher goals for the coming years.

In addition, the reporting season in Germany continued. Preliminary annual figures allow BMW shares to fall 5.5 percent. As expected, the automaker significantly increased earnings and intends to significantly increase the dividend. Investors, however, took issue with the recent operating margin development in the core auto business.

Fertilizer and salt company K+S topped the MDax thanks to a price increase of nearly 11 percent. Baader Bank analyst Markus Mayer stressed that the proposed dividend was slightly better than expected.

Hannover Re shares fell 5.7 percent. After a jump in earnings in the second year of Corona, the reinsurer wants to drastically increase the dividend to a total of EUR 5.75 per share. However, the special dividend it contains is lower than expected, analysts at Jefferies complained.

Shares of Hugo Boss lost 7.1 percent, although the fashion group reported a significant increase in sales and profits over the past year. Also at Compugroup, shareholders had to deal with a 6.2 percent price drop despite good year-on-year figures.

The euro recently fell to 1.1006 US dollars. The European Central Bank (ECB) had set the benchmark rate at $1.1084 in the afternoon. The current yield on the bond market has stalled at 0.02 percent. The Rex pension index fell 0.08 percent to 141.79 points. The Bund future lost 0.60 percent to 162.68 points.

© dpa-infocom, dpa:220310-99-459467/7


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