Stock market uncertainty prevails as the DAX drops further, closing 0.77% lower at 19,077 points. Wall Street also sees declines despite positive technology sector earnings. Rising inflation in the eurozone and the upcoming US presidential election contribute to investor caution. While Airbus reports strong quarterly figures, other sectors struggle with weak sales and rising costs. Meanwhile, Siemens plans a billion-euro acquisition, and Merck restructures its liquid crystals division amid a tough economic landscape.
The stock market is experiencing significant uncertainty as the US elections approach, with the DAX index dipping today, nearing the 19,000-point mark. Wall Street is also facing declines.
Today, the DAX index took another hit, closing down by 0.77 percent at 19,077 points, following a 1.1 percent drop the previous day. It managed to stay above the crucial threshold of 19,000 points, despite dipping to a day low of 19,004 points.
This downward trend marks a continuation of the recent corrections after the DAX narrowly missed its record high of 19,674 points earlier in the week. Rather than aiming for the elusive 20,000 points, investors are now forced to concentrate on the 19,000-point mark. The MDAX, representing mid-sized stocks, also fell by 1.14 percent, closing at 26,326 points.
DAX Showing Weak Performance
Christian Henke, an analyst at IG, noted, “The DAX has lost momentum. With exceptionally strong economic data from the US complicating potential interest rate cuts in December, alongside rising inflation in the Eurozone and the looming US presidential election, investors are becoming more cautious.”
Even strong earnings reports from the tech sector in the US are failing to provide support to the markets. Analysts report a growing sense of disillusionment among market participants. Jürgen Molnar, a capital market strategist at Robo Markets, stated, “When better-than-expected results lead to sell-offs, like we’ve seen with Meta and Microsoft, it signals that the market is in need of correction.”
Economic Insights from October 31, 2024
Airbus Delivers Positive News
Despite the overall trend, quarterly results from Airbus provided a glimmer of hope, leading to a minor increase in share prices against the trend. However, the stock could not sustain its gains and ended approximately 0.3 percent higher, well short of its earlier peak.
For the first nine months of Airbus’s financial year, adjusted earnings before interest and taxes (EBIT) saw a drop of 23 percent to 2.8 billion euros, although revenue increased by five percent to 44.5 billion euros. In the third quarter, adjusted EBIT rose by 39 percent to 1.41 billion euros, exceeding analysts’ expectations by over 200 million euros. The net profit from July to September was 983 million euros, marking a 22 percent year-over-year increase.
Inflation on the Rise in the Eurozone
Inflation trends remain a critical concern for investors. Following somewhat disappointing inflation data from Germany yesterday, expectations were not high for Eurozone statistics either. Prices for goods and services unexpectedly surged by 2.0 percent in October compared to the same month last year, according to Eurostat.
This increase raises questions about the European Central Bank’s (ECB) monetary policy. Chief economist Alexander Krüger from Hauck Aufhäuser Lampe Privatbank remarked, “The elevated inflation rates don’t necessarily herald new inflation concerns.” He noted that while the ECB may continue to cut interest rates gradually, it will remain vigilant regarding inflation trends.
Ulrike Kastens, an economist at DWS, shared a similar sentiment, suggesting that the current inflation data should not alarm the ECB, as an uptick in inflation during the fourth quarter was anticipated. “Overall, the ECB is still poised to proceed with interest rate cuts,” Kastens added.
Euro Currency Activity
Amid a host of economic updates, the euro remained relatively stable in European trading at 1.0882 dollars. Investors are closely monitoring both the upcoming US election and the ongoing inflation dynamics within the Eurozone. The ECB set the reference rate today at 1.0882 dollars, up from 1.0815 the previous day.
In a recent interview, ECB President Christine Lagarde reiterated that the struggle against high inflation is far from over, stating, “We have a goal in sight, but we cannot claim that inflation has been vanquished.” Bundesbank President Joachim Nagel also advocated for caution regarding future interest rate decisions.
Positive Retail Sector Signals
Data from the German retail sector showed a surprisingly strong sales increase in September, with a 0.6 percent rise from the previous month, according to the Federal Statistical Office. Adjusted for inflation, the growth was even more robust at 1.2 percent.
Despite a decline in import prices