The DAX index has surged past 19,000 points, rebounding from a low of 18,839 points amid market caution regarding Donald Trump’s potential influence on global stock markets. Despite the initial downturn, the index gained 0.6 percent, closing at 19,122 points. Asian markets faced declines due to economic concerns, particularly in China, while the dollar’s strength pressured gold and oil prices. Corporate earnings reports showed mixed results, with Deutsche Telekom raising profit forecasts, while companies like SMA Solar and Bayer faced significant challenges.
DAX Surges Above 19,000 Points Amid Market Caution
In a significant turn of events, the DAX index showcased resilience, climbing above the pivotal 19,000-point threshold after initially appearing poised for further declines before the trading day commenced. Contrary to early market predictions, the German index opened with a robust gain, ascending by as much as 0.6 percent to reach 19,122 points. Nevertheless, market analysts continue to advise vigilance, citing increasing apprehensions related to Donald Trump’s influence on stock markets across Europe and Asia, as highlighted by Thomas Altmann, a portfolio manager at QC Partners.
The horizontal support level at 19,000/18,900 points proved to be a formidable barrier against renewed selling pressure yesterday. Although it dipped to a low of 18,839 points, the DAX managed a recovery during the trading session, narrowly holding onto the 19,000-point mark by the day’s end.
Market Reactions and Company Updates
This development provides a tailwind for the German stock market’s benchmark. Jörg Scherer, head of technical analysis at HSBC, emphasized the importance of maintaining this critical support zone to avoid a potential technical setback, noting that a close below 18,900 could lead to a decline of approximately 700 points.
Following the alignment of the US inflation rate with expectations, market participants are now forecasting an 83 percent likelihood of a 25 basis point rate cut by the US Federal Reserve in December.
Asian markets experienced a downturn this morning, driven by economic concerns. The Chinese markets were significantly impacted by weaker real estate stocks, with both the Shanghai Stock Exchange and the major companies index in Shanghai and Shenzhen dropping by 1.7 percent. Investors expressed disappointment over the recent economic stimulus measures announced by Beijing’s leadership.
Meanwhile, the Tokyo Stock Exchange recorded losses for the third consecutive day, with the Nikkei 225 index slipping by half a percent to 38,535 points. Strategist Hiroshi Namioka from T&D Asset Management commented, “It seems the Nikkei’s upward trajectory is facing resistance.”
The strength of the dollar is also exerting downward pressure on gold prices, as rising dollar rates diminish demand for the dollar-denominated asset outside the dollar zone. This morning, gold prices fell by 0.5 percent to $2,557, already more than eight percent below its record high of $2,790 reached at the end of October.
In the oil market, the strong dollar’s influence continues to be felt. North Sea Brent crude oil saw a decrease of 0.4 percent, settling at $71.97 per barrel, while US WTI oil dipped by 0.5 percent to $68.08.
In the cryptocurrency realm, Bitcoin maintains its record-breaking trajectory, soaring above the $90,000 mark yesterday. This morning, it reached a historic high of $90,647, with investors hopeful for regulatory easing following Trump’s inauguration as US President.
On the corporate front, numerous companies within the DAX released their earnings today, including Deutsche Telekom, which reported strong performance in the US market during the third quarter. The company has slightly raised its operating profit forecast, anticipating an increase of just over six percent to approximately €43 billion.
Siemens also projected growth for the upcoming business year 2024/2025, estimating revenue growth of three to seven percent on a comparable basis. Following a record profit of €9 billion in the previous business year 2023/24, shareholders can expect a dividend increase from €4.70 to €5.20.
Energy firm E.ON increased its investments despite reporting losses in the first nine months, maintaining its forecast. Although adjusted group profit fell by 25 percent to €2.2 billion, investments rose by 20 percent to €4.7 billion, with the company aiming for an adjusted EBITDA between €8.8 and €9.0 billion for the full year.
Merck KGaA is on the path to recovery following the post-COVID downturn, benefiting from a resurgence in demand for semiconductor materials linked to AI applications. The pharmaceutical sector continues to thrive, with profits rising nearly ten percent to €812 million during the third quarter.
A hedge fund has placed a significant wager of over €100 million against Bayer, the pharmaceutical and agricultural giant based in Leverkusen. The New York-based D.E. Shaw fund initiated a short position valued at €102 million, following a recent downgrade of Bayer’s earnings forecast for 2024, which drove the stock to a 20-year low.
SMA Solar’s shares plummeted by more than 20 percent during early trading in Frankfurt after the company revised its revenue and earnings forecast for 2024 downward due to substantial losses in the first nine months. A trader remarked, “SMA is struggling to survive amidst fierce competition from China.”
Insurer Talanx (HDI) anticipates even greater profits for the current and upcoming years after an unexpectedly strong summer. Despite facing higher catastrophe losses, CEO Torsten Leue now forecasts a record profit exceeding €1.9 billion for 2024, with expectations for the surplus to surpass €2.1 billion in 2025.
Germany’s largest container shipping company, Hapag-Lloyd, has seen a resurgence in business since mid-year due to stronger demand and higher freight rates. For the first nine months, the fifth-largest shipping company globally reported an operating profit (EBIT) of around €1.8 billion, which is 35 percent lower than the previous year, while revenue remained stable at approximately €14.1 billion.
The industrial service provider Bilfinger, based in Mannheim, reported a 15 percent increase in revenue during the third quarter, reaching €1.28 billion, thanks to acquisitions from Stork. The operating revenue margin improved to 6.0 percent, up from 5.1 percent the previous year.
BayWa, an agricultural and building materials company based in Munich, faced significant losses in the first nine months due to challenges in the renewable energy sector, reporting an operating loss (EBIT) of €299.8 million and acknowledging liquidity issues in mid-July.
IT service provider GFT Technologies has lowered its annual targets once again, now expecting a revenue increase of ten percent to approximately €865 million, which is €20 million less than previously forecasted. Adjusted earnings before interest and taxes have also been revised down by €5 million to €77 million.
Chip industry supplier ASML remains focused on its long-term objectives despite navigating more challenging market conditions. The growing relevance of artificial intelligence is anticipated to drive momentum, with projected revenue rising to between €44 and €60 billion by 2030.
In a notable legal development, an arbitration court of the International Chamber of Commerce awarded Austrian energy firm OMV €230 million in damages in its dispute with Gazprom, stemming from irregular gas deliveries to Germany that ceased entirely in September 2022.
Italy has divested another