Investor sentiment remains stable as the U.S. prepares for inflation data and earnings season, with the DAX showing modest gains. The market is buoyed by reduced fears of tariffs under President Trump. U.S. consumer price data is anticipated to reveal rising inflation, while major banks are expected to report strong earnings. In Asia, markets are mixed, and oil and gold prices are up. Bayer faces legal challenges, while Nordex and Rheinmetall report positive business developments.
Investor Sentiment and Market Trends
As the U.S. gears up for the release of inflation data and the commencement of earnings season, investor sentiment remains steady. Midweek trading sees the DAX opening with a slight uptick, reflecting modest gains.
The reduced apprehension surrounding potential harsh tariffs from the incoming U.S. President Donald Trump is continuing to energize the German stock market. The DAX kicks off the trading day with a 0.2 percent increase, reaching 20,305 points.
This marks an extension of its recent upward trend, having gained 0.7 percent the day prior at 20,271 points. The index has successfully maintained its position above the significant threshold of 20,000 points earlier this week, indicating a positive outlook.
However, to sustain this momentum, further upward movement is essential. The DAX faces a critical challenge in surpassing the previous high of approximately 20,400 points set on Friday, as noted by Konstantin Oldenburger, an analyst at CMC Markets. “New buyers are likely to emerge only if we break above that level,” he stated.
Focus on U.S. Economic Indicators and Earnings Reports
Today’s spotlight is on U.S. consumer price data, which is set to be unveiled before Wall Street opens. Economists predict a notable rise in inflation for December, with expectations of an increase to 2.9 percent from November’s 2.7 percent. Due to persistent inflationary pressures, many analysts foresee that the U.S. Federal Reserve may implement just one more key interest rate reduction this year.
As the trading day progresses, investor attention is expected to shift towards U.S. banking giants such as JP Morgan Chase, Goldman Sachs, Citigroup, and Wells Fargo, who will set the tone for the earnings season with their financial results. Analysts anticipate that these banks will report higher earnings than the previous year, fueled by robust transaction activity and a recovering trading environment.
In Asia, stock prices have remained subdued ahead of the anticipated bank earnings and inflation report from the U.S. The Shanghai Stock Exchange and major indices in Shanghai and Shenzhen experienced declines of about half a percent. Japan’s market saw minimal changes, with the Nikkei 225 index dipping slightly by 0.1 percent to 38,444 points, while the broader Topix index gained 0.3 percent.
Additionally, oil prices have seen further gains, with North Sea Brent crude rising by 0.6 percent to $80.37 per barrel. The U.S. dollar exhibits continued strength in early foreign exchange trading, with the euro declining by 0.1 percent to $1.0301. Gold prices have also increased, with an ounce priced at $2,683, reflecting a 0.3 percent rise.
In the cryptocurrency space, heightened investor risk appetite has allowed Bitcoin to build on its recent successes, trading around $97,000. Anticipation surrounds the upcoming inauguration of Donald Trump, potentially providing an additional boost to the crypto market.
On a different note, Bayer has faced setbacks as it lost another court case in the U.S. surrounding health claims related to the banned chemical PCB, resulting in a jury award of $25 million in damages and $75 million in punitive damages to four of the plaintiffs. A crucial appeal process regarding PCB is slated to begin in February, which could have significant implications.
Rheinmetall, the defense contractor, announced its first complete sale of the new air defense system Skynex to a NATO country, securing an order from Italy worth initially 73 million euros. This deal is significant as reference customers are crucial in the defense sector, potentially paving the way for additional contracts with other NATO nations.
In the SDAX, Borussia Dortmund’s shares have plummeted over six percent following an unexpected defeat against Kiel, dropping to €2.77, the lowest value since mid-2013. The club currently sits at 9th place in the standings, far from qualifying for international competitions.
Wind turbine manufacturer Nordex reported a substantial increase in new business for the fourth quarter, with order intake soaring nearly 32 percent to 3.25 gigawatts, predominantly from Europe. For 2024, Nordex achieved a record order intake of 8.3 gigawatts, marking a 13 percent increase from the previous year.
Pfizer, the U.S. pharmaceutical giant, plans to divest its stake in Haleon, the maker of Sensodyne, selling shares worth £2.5 billion ($3.05 billion) and reducing its ownership from 15 to approximately 7.3 percent. Despite this sale, Pfizer will remain the largest shareholder of Haleon.
Finally, the U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against tech billionaire Elon Musk regarding his stock purchases related to the Twitter acquisition in 2022, alleging that he failed to timely disclose his stake exceeding five percent, which allowed him to buy shares at a lower price.
Meta, the parent company of Facebook, announced plans to reduce its workforce by about five percent this year, targeting employees with low performance ratings for dismissal. The company intends to fill these positions with new hires, as indicated by CEO Mark Zuckerberg’s communication to employees, reported by financial services and technology news outlets.