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FRANKFURT (Dow Jones) – On Friday afternoon, European stock markets recovered after losses from the previous day. The DAX climbed 1.6 percent to 12,715 points and the Euro-Stoxx-50 was 1.1 percent higher to 3,433 points. Car stocks that were sold the day before and whose industry index rose by 3 percent are particularly sought after. Wall Street, which managed to break out of its lows within a year, is setting the course. Soothing words from Fed Governor Christopher Waller, who raised expectations for rate hike by 100 basis points by the US Central Bank, provide a relaxation. The small expiry date for June options is also helpful. In addition, we are looking at Italy, where the government crisis is replacing the most important issues of inflation and interest rates in the short term.
Government crisis in Italy
Markets reacted almost allergically to the announcement of the Five Star Movement, which co-ruled in Italy, that they would stay away from the vote of confidence of Prime Minister Mario Draghi. Although Draghi clearly won the vote on the economic stimulus package he tied to the confidence vote, even without their participation. Nevertheless, that evening he resigned, which was rejected by Italian President Sergio Mattarella.
According to Ulrich Stephan, chief investment strategist for private and corporate clients at Deutsche Bank, Draghi can now try to unite supporters in parliament again and get a confidence vote. Nevertheless, the risk of early elections rather than regular elections that will take place this spring is increasing.
According to polls, Eurosceptic parties are currently gaining a majority in parliament. However, the disbursement of the next-generation EU fund involves reforms that the new government is likely to pursue with less vigor. The ECB wants to present on Thursday an instrument that aims to prevent “substantially unjustified” widening of the yield gap between Italian and German government bonds. However, this instrument is unlikely to be appropriate in the event of widening the spreads as a result of the Italian government crisis. The euro is still trading just above the dollar parity.
Voestalpine with a good first quarter
As expected, Voestalpine (+ 0.7%) achieved a good first quarter. EBITDA of EUR 877 million is 26 percent higher than Jefferies’ optimistic estimate. The Austrians also raised their earnings estimates for the coming quarter.
Car shares rose 3.1 percent across Europe. In DAX, Porsche and Continental gained 4 percent. You Aston-Martin in London by more than 16 percent. Following the capital increase, the British luxury car maker found a second major investor in Saudi Arabia’s public investment fund.
The first results of the reporting season are disappointing
Preliminary business data from Drgerwerk (-2.7%) for the first half of the year do not partially match the low EBIT expectations. During the reporting period, Drger reported an EBIT loss of 112 million euros, while Warburg only expected minus 68 million. According to the company, the gross margin has suffered from the product mix shift due to falling demand for crown-related products and higher purchase costs for electronic components and logistics.
Software AG shares lost 2.4 percent. The problem here is that the Darmstadt-based company is becoming a bit more cautious about its development department, which is the digital business. Branch “postings” are expected to only increase by 12 to 18 percent in the fiscal year, up from 15 to 25 percent earlier. However, since the beginning of the year, the share has already lost 25%, so some of the bad news should be valued, according to the market.
Richemont loses 6 percent. For RBC analysts, sales in the first quarter of 2022/23 were slightly higher than market expectations at EUR 5.26 billion. In Europe, America and Japan, sales increased significantly in some cases, but fell in the important APAC region. Additionally, the poor data from China is a burden.
Burberry shares fell as much as 7 percent in London. The luxury fashion group increased sales to a similar level in the first quarter of just 1 percent due to the negative impact of Covid restrictions in China. “Burberry’s first-quarter results have severely disappointed the market, despite concerns about weak growth rates,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown.
Stock index last + / -% absolute + / -% YTD
Euro Stoxx 50 3 432.95 + 1.1% 36.34 -20.1%
Stoxx 50 3 460.03 + 1.0% 34.99 -9.4%
DAX 12 714.78 + 1.6% 195.12 -20.0%
MDAX 25 312.47 + 1.2% 306.96 -27.9%
TecDAX 2,904.23 + 1.0% 28.91 -25.9%
SDAX 11 883.72 + 0.9% 105.38 -27.6%
FTSE 7 104.45 + 0.9% 64.64 -4.7%
CAC 5950.72 + 0.6% 35.31 -16.8%
Fixed Income Market Last Absolute +/- YTD
10-year return from Germany 1.15 -0.02 +1.33
10-year profitability in the USA 2.93 -0.03 +1.42
FOREX last +/-% Fri 8:08 Thu 17:34% YTD
EUR / USD 1.0052 + 0.3% 1.0026 1.0017 -11.6%
EUR / JPY 139.45 + 0.2% 139.08 139.14 + 6.6%
EUR / CHF 0.9849 -0.1% 0.9853 0.9856 -5.1%
EUR / GBP 0.8492 + 0.2% 0.8475 0.8484 + 1.1%
USD / JPY 138.75 -0.2% 138.88 138.93 + 20.5%
GBP / USD 1.1841 + 0.1% 1.1826 1.1805 -12.5%
USD / CNH (offshore) 6.7679 + 0.0% 6.7759 6.7626 + 6.5%
BTC / USD 20 847.00 + 1.9% 20 524.03 20 078.32 -54.9%
ROHL last VT-Settl. +/-% +/- USD% YTD
WTI / Nymex 97.49 95.78 + 1.8% 1.71 + 35.1%
Brent / ICE 101.23 99.10 + 2.1% 2.13 + 35.1%
GAS VT close +/- EUR
Dutch TTF 169.03 174.50 -3.4% -6.00 + 33.7%
METALS last day before +/-% +/- USD% YTD
Gold (spot) 1,707.01 1,709.94 -0.2% -2.93 -6.7%
Silver (Spot) 18.46 18.41 + 0.3% +0.05 -20.8%
Platinum (Spot) 845.80 847.28 -0.2% -1.48 -12.9%
The future of copper 3.16 3.21 -1.7% -0.06 -29.0%
YTD at the end of the day
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(END) Dow Jones Newswires
July 15, 2022 07:12 ET (11:12 GMT)
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