Morning FuW report of July 14, 2022 | finance and economy

night

United States

The US inflation rate of 9.1% – the highest in 41 years – released on Wednesday put pressure on US stock prices. This increased the likelihood of significant rate hikes by the Fed. The market expects a rate hike by 1 percentage point. at the next meeting of the central bank.

FROM Dow Jones Industrial Average (-0.67%) fell to 30,772 points. FROM S&P 500 (-0.45%) fell to 3,801 points. Technical index Nasdaq 100 (-0.14%) closed at 11,728 points.

Airline delta (-4.47%) forecasts high operating costs by the end of the year. Also American airlines (-3.11%) was under pressure.

Social media service Twitter (+ 7.90%) filed a lawsuit against Elon Musk to force Musk to withdraw his takeover bid.

Streaming provider Netflix (+ 1.21%) wants to go Microsoft They work together (-0.37%) to run ads to fund the cheaper version.

Asia / Pacific

Asian markets were mostly positive on Thursday. Japanese Nike 225 it is 0.8% higher. FROM hang a dream Hong Kong lost 0.2. FROM Shanghai composite advance payments 0.1%. South Korea Kospi gains 0.2%. Australian S & P / ASX 200 recorded an increase of 0.5%.

this futures markets indicate a small plus for European markets. The contract for the German Dax shows an increase of 0.2%, for the Euro Stoxx 50 it is indexed 0.1%. The S&P 500 contract is quoted unchanged.

News Pre-Exchange Switzerland

Sample group: Swatch Group watch manufacturer (CLOCK 226.30 -3.08%) increases sales and profits. Net sales rose 7.4% to CHF 3.61 billion in the first half of the year, less than CHF 4 billion in pre-pandemic sales in the first half of 2019. Currency-adjusted growth is 6.5%. Operating profit (EBIT) increases by 25% to CHF 503 million. Profit increases by 19% to CHF 320 million. In the second half of the year, Swatch Group expects “extremely positive” growth prospects in all price segments. (Read more here.)

Swiss steel: Producer of special steel Swiss Steel (STLN 0.2400 -1.03%) increases operating profit (EBITDA) in the second quarter, according to preliminary data, by 48% to EUR 96 million. Profits rose by a good half to € 31 million. In turn, the sales volume fell by 10% to 457 kilotons. The cause is a failure of the Ugine steel plant. Production has been gradually resuming there since June. Detailed data will be presented on August 16. (Read more here.)

Dormakaba: Dormakaba closing technician (DOKA 430.50 + 1.53%) establishes a strategic partnership with the German Schüco Group in Bielefeld. They both want to collaborate in the development of digitization and access control. (Read more here.)

Allreal: Chairman of the board of the Allreal real estate group (ALL 158.80 + 1.15%)Roger Herzog resigns in spring 2023. Herzog has been with Allreal for almost 20 years and has resigned at his own request. The search for a successor began. (Read more here.)

Kudelski: IT security specialist Kudelski sells a 40% stake in iWedia, a software provider for network televisions. Information on the selling price was not provided. Kudelski (KUD 2.66 + 2.12%) he wants to concentrate more on his core business. (Read more here.)

Perrot Duval: Automation specialist Perrot Duval (PEDU 98.50 -0.52%) suffered a loss of CHF 2.8 million from April in fiscal year 2021/2021, after losing CHF 1.9 million in the previous year. The main reason is delivery problems in the filling department. Thanks to the integration with the Polystone Group, sales increased by 106.5% to CHF 14.5 million (more here).

Perspective interest rates and currency exchange

This week the euro fell to parity against the dollar. This means that sometimes 1 euro costs 1 dollar. The latest data on inflation in the US in particular caused a further decline of the single currency, which was trading below the 1 dollar threshold already on Wednesday afternoon.

The main reason for the recent decline in the euro is the diverging interest rate expectations. This is evident in overnight money swaps, which have extrapolated the key interest rates of the currency area for years – and are also a popular measure of risk-free interest rates among investors.

On the interest side, the dollar is currently receiving a lot of support: the US two-year real interest rate (inflation-adjusted) recently rose from -1.5% in early June to -0.13% on Tuesday. On the other hand, the situation in the euro zone decreased: recently from –2.5% to –3.3%. This discrepancy explains the movements of the two currencies since the beginning of the year, and thus also the fall of the euro to parity with the dollar this week.

The declared goal of the US Federal Reserve is for real interest rates to become positive again to slow down the economy and hence inflation. However, recent US inflation data show that the upward trend in prices picked up again in June. The most important drivers were energy prices again.

Even if US oil and gas prices have been falling since June, a 0.75pps rate hike in July to 2.25% to 2.5% is more likely. Therefore, the weakness of the euro cannot end in sight. The euro has fallen below CHF 0.9850 this week compared to the Swiss currency.

Leave a Comment