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Thursday, August 11, 2022

Market report: Investors await the US Federal Reserve

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market report

Status: 07/27/2022 07:29

The swing movement just above the DAX 13,000 mark is initially expected to continue today. Ahead of the next interest rate hike expected in the US tonight, there is no buying mood on the stock market.

The German stock market barometer is expected to start trading at 13,170 points, about half a percent higher than yesterday’s closing level. Investors are showing restraint in anticipation of the next rate hike by the US Federal Reserve (Fed).

How big will the rate hike be?

The Fed will most likely continue its fight against high inflation tonight. After a sharp rise in interest rates in June, a further rise of 0.75 percentage point is expected. The key rate would then be between 2.25 and 2.5%, after being at zero a few months ago. Even a larger increase of a full percentage point seems possible.

Wall Street under pressure

Wall Street specifications are rather unfavorable in the morning. A profit warning from retail group Walmart has created a bad mood on US stock exchanges. A potential setback for the US economy following a slowdown in consumer spending prompted selling. The US Dow Jones Standard Value Index closed down 0.7% at 31,761 points. The tech-heavy Nasdaq fell 1.9% to 11,562 points. The broad S&P 500 lost 1.2% to 3,921 points.

Alphabet and Microsoft with numbers

However, strong quarterly US corporate numbers provided some relief after the US stock market closed. Alphabet, the parent company of Google, posted sales growth of 16% to nearly $69.7 billion in the second quarter, as the American technology group announced on Tuesday evening. Thus, Alphabet has almost met analysts’ expectations.

Falling demand for PCs around the world has made things difficult for Windows Group Microsoft, as have falling advertising budgets and a stronger dollar. However, Microsoft also increased its revenue significantly by twelve percent to $51.9 billion. Microsoft earned $16.7 billion, up 2% from the same period last year.

Asian stock markets undecided

Investors also prefer to take a break on Asian exchanges. The Japanese Nikkei index rose 0.1% to 27,693 points. The Shanghai Stock Exchange fell 0.1%. The index of the largest companies in Shanghai and Shenzhen lost 0.4%.

The euro back to parity

In the foreign exchange market, investors are eagerly awaiting the decision on interest rates in the United States. The euro is once again approaching parity with the US dollar. In the morning, the single European currency is trading at $1.0148.

Oil remains high

Oil prices change little in the morning. A barrel of North Sea Brent currently costs $104.45. Prices rose again yesterday due to Russia’s announcement that it would again cut natural gas supplies via the Nord Stream 1 pipeline from the Baltic Sea starting today. A troy ounce of gold in the morning still costs $1715.

Adidas suffers from Chinese business

A whole series of quarterly figures and outlooks for German and international companies keep investors busy in the morning. The sporting goods manufacturer Adidas had already revised downwards its forecast for the current financial year last night. The corona restrictions in China are affecting the business more than expected. Instead of sales growth of around eleven percent, only a five to nine percent increase can be expected in 2022. At around 1.3 billion euros, the result from continuing operations should be a good quarter lower than expected.

Deutsche Börse earns more

On the other hand, Deutsche Börse is becoming a little more optimistic again after good results in the second quarter. The group now expects net sales for the current year to be “significantly” above the original plan of 3.8 billion euros, as the company announced yesterday after the close of trading. In the second quarter, net sales increased by 15% to 1.02 billion euros. The net result was a profit of around 341 million euros, ten percent more than a year ago.

Qiagen raises its forecast

After the first half of 2022, the Qiagen diagnostics group is also more confident for 2022. The DAX company now expects sales of at least 2.2 billion dollars and an adjusted diluted profit of at least 2, $30 per share. Group sales fell in the second quarter from the same quarter last year by 9% to $516 million. Adjusted earnings fell to $0.51 per share from $0.67 per share.

Lufthansa on strike

With a warning strike by ground staff, the Ver.di union wants to increase the pressure in the ongoing wage negotiations with Lufthansa. The strike, which is expected to last until 6 a.m. tomorrow, is hitting passengers hard: Lufthansa has canceled more than 1,000 flights at the Frankfurt and Munich hubs and fears the effects until Friday, the last day of school before the summer holidays in Bavaria. 134,000 passengers had to change or abandon their travel plans.

Source www.tagesschau.de

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