Markets are cautiously recovering, with the DAX index rising 0.7% to 20,264 points after a previous decline. Investors are focused on upcoming US inflation data and the earnings season, starting with major banks. Expectations for interest rate cuts are tempered, with economists predicting a rise in producer prices. In Asia, mixed performances were noted, while Bitcoin rebounded to around $95,000. Amazon ordered 200 electric trucks, and Südzucker reported a significant profit drop.
Market Update: DAX Rebounds and Inflation Data in Focus
The stock market is cautiously navigating its way back towards profitability. Investors are now placing significant importance on the latest inflation figures from the United States as they gear up for the upcoming earnings season, which is expected to play a critical role in market dynamics.
The recent dip in the DAX index appears to have reached a temporary halt. As trading commenced, the DAX experienced a rise of 0.7 percent, reaching 20,264 points. This follows a 0.4 percent decline yesterday, where the index settled at 20,133 points. A positive takeaway is that the DAX managed to hold above the 20,000-point threshold after hitting a peak of 20,480 points last week.
Interest Rate Policy and Earnings Season Ahead
The interest rate strategy of the US Federal Reserve continues to be a pivotal topic in the financial landscape. Today marks the release of the Producer Price Index (PPI) in the US, with the Consumer Price Index (CPI) set to follow tomorrow. Economists anticipate a notable increase in producer prices for December, projecting a rise of 3.4 percent year-over-year, compared to a 3.0 percent increase in November.
Market participants are increasingly curious about the potential for interest rate cuts this year. Concerns are growing that the trade policies of the incoming US administration could reignite inflation, potentially leading to more interest rate hikes in the US. This scenario would pose challenges for the stock market, which has been buoyed by expectations of further interest rate reductions.
According to Helaba, inflation expectations have risen while the outlook for interest rate cuts, particularly from the Fed, is under pressure. Current market predictions suggest only one 25 basis point rate cut from the Fed by year-end, whereas for the Eurozone, over three similar cuts are anticipated. This is a stark contrast to earlier expectations of four rate cuts for the European Central Bank (ECB) at the beginning of the year.
The earnings season kicks off tomorrow in the US with results from major banks like Citigroup and JPMorgan Chase. This could provide fresh insights into market performance. Oliver Pursche from Wealthspire Advisors highlights the dilemma investors face: whether robust corporate profits from a strong economy outweigh the benefits of lower inflation from a weakening economy.
In Germany, companies will soon disclose their financial results as well. While DAX firms are projected to see an 11 percent profit increase for 2025, this is influenced by a lower calculation base, according to Ulrich Stephan, chief investment strategist at Deutsche Bank. However, the outlook for the recently concluded fiscal year is less optimistic, with projections indicating nearly a five percent decline in profits for last year.
In the Asian markets, Japanese stocks have taken a step back, while other regions have shown signs of recovery. The Nikkei 225 index dropped by 1.8 percent to 38,474 points, reflecting the earlier week’s market weakness. Conversely, the CSI 300, which tracks major Chinese stocks, rose 2.6 percent to 3,820 points, and Hong Kong’s Hang Seng index gained 1.9 percent, reaching 19,230 points. Australia’s S&P/ASX 200 index also saw a modest rise of 0.5 percent to 8,231 points, with markets in India, South Korea, and Taiwan posting gains as well.
In cryptocurrency news, Bitcoin has made a notable rebound, distancing itself from its recent low. On the Bitstamp exchange, Bitcoin was valued at approximately $95,000 on Tuesday morning, recovering from a dip to nearly $89,000 on Monday.
In corporate news, Amazon has made headlines by ordering 200 electric trucks from Daimler Truck for its European operations, set to commence in 2025. Over 140 of these trucks will operate in the UK, with about 50 designated for Germany. This addition follows the deployment of 38 electric trucks by Amazon in Europe since the beginning of the year.
Furthermore, several major US companies, including Hyundai, Stellantis, and Delta Air Lines, have announced significant donations to support the inauguration of President Donald Trump. Each company has pledged one million dollars, joining other corporations like Boeing, General Motors, and Microsoft in this initiative.
Lastly, Südzucker, Europe’s leading sugar producer, has reported a significant profit drop in the first nine months of the 2024/25 financial year, primarily due to declining prices. Revenue fell to 7.5 billion euros from 7.8 billion euros, and the operating result (Ebitda) plummeted by over half, down to 502 million euros from 1.12 billion euros the previous year.