The Dax has recovered somewhat from the weak trading week after Easter. While hopes of imminent interest rate cuts have recently dimmed in the USA due to strong economic data and still quite high inflation, the European Central Bank is still expected to make its first interest rate hike in June. The ECB’s next decision is due this Thursday. In addition, with a view to the first quarter, stock market investors are expecting “a good reporting season” for companies, as Konstantin Oldenburger, market analyst at broker CMC Markets, said.
The leading German index ended trading with a premium of 0.79 percent to 18,319 points. On the Tuesday after Easter, the Dax reached a record high of 18,567 points before profit-taking began. Statements from US central bankers and a surprisingly strong labor market report had raised the question of whether there would be an interest rate cut in the United States this year. This brought uncertainty to the stock markets. Although this is not yet the main scenario, discussion of this possibility has intensified.
“The news from companies could be exactly what the stock market needs to break away from the exhausting discussion about possible interest rate cuts,” believes Oldenburger. “The encouraging economic data of the past few weeks suggests fewer interest rate cuts by the Fed this year, but also suggests a positive profit development in companies.”
With regard to the upcoming ECB meeting and the economic outlook for the euro area, chief economist Gilles Moëc from Axa IM continues to assume that the ECB will lower its key interest rate for the first time in June. In his words, it “should not wait until inflation has fallen to two percent – even if the Fed is still hesitant.”
The MDax of medium-sized stocks rose by 0.82 percent to 27,137 points. The EuroStoxx 50, the leading index for the Euroregion, gained 0.62 percent to 5,046 points, and the national stock exchanges in Paris and London also rose. Moderate profits were recorded in the USA at the close of the European stock market.
Zalando gained 7.4 percent at the top of the Dax after a price setback on Friday. Citigroup recommends buying the online fashion retailer’s shares and considers market expectations for adjusted operating profit to be too low.
Continental rose by 1.7 percent following a recommendation from the investment house Jefferies. Bayer fell by 0.4 percent. The pharmaceutical and agricultural chemical company has to pay significantly less than expected in a legal dispute surrounding the weed killer Roundup (glyphosate).
Armaments values remained in demand. Rheinmetall shares again reached a record high and ultimately rose by 4.4 percent. For Hensoldt the MDax rose by 3.0 percent. Renk recovered somewhat from the recent setback and gained 8.0 percent.
The hope of summer business without strikes drove Lufthansa shares up 3.0 percent. The Verdi union and the employers accepted an arbitrator’s decision that could resolve the collective bargaining dispute among the approximately 25,000 aviation security staff. On top of that, according to recent information, negotiations at Lufthansa with the UFO union were constructive.
With a positive study on ProSiebenSat.1, Citigroup analyst Thomas Singlehurst gave the media and television company a share price increase of 6.9 percent. This means that the share not only climbed to the top spot in the SDax, but also its highest level since September 2023. Ahead of the first quarter figures due on May 14th, Singlehurst sees a convincing risk-reward ratio in the short term.
The euro rose to $1.0852 in the early evening. The European Central Bank set the reference rate at 1.0823 (Friday: 1.0841) US dollars. The dollar therefore cost 0.9239 (0.9224) euros.
On the bond market, the current yield rose from 2.40 percent to 2.49 percent on Friday. The Rex bond index fell by 0.45 percent to 125 points. The Bund future lost 0.23 percent to 132 points.