Clear words from Fed boss Powell on monetary policy in the USA and nervousness about a possibly larger rate hike by the ECB sent the German stock market plummeting on Friday.
Clear words from Fed boss Powell on monetary policy in the USA and nervousness about a possibly larger rate hike by the ECB sent the German stock market plummeting on Friday.
The leading index Dax fell below the 13,000 point mark to its lowest level since mid-July. Sentiment also deteriorated significantly across Europe and in the USA.
The Dax ultimately closed 2.26 percent lower at 12,971.47 points. In the course of the week it lost 4.2 percent. The MDax of medium-sized companies fell by 2.10 percent on Friday to 25,523.69 points.
US Federal Reserve Chairman Jerome Powell in his speech sharpened the tone towards combating inflation, wrote Konstantin Oldenburger, market analyst at CMC Markets. “The Fed will continue to tighten monetary policy in the future, regardless of the associated ‘unfortunate costs’ for the economy and thus probably also for the stock market.” Another factor that was particularly burdensome for the stock exchanges was that some members of the Council of the European Central Bank (ECB) were in favor of an interest rate hike of 0.75 percentage points in September, according to traders. Previously, an increase of 0.5 percentage points had been assumed.
Among the individual values, rumors on the valuation of the planned IPO of the VW sports car subsidiary Porsche AG supported the preferred shares of Volkswagen and the papers of Porsche SE. The shares of the group holding ended the day with a premium of 0.4 percent as the only one in the Dax in the plus. VW gave way by 0.7 percent. The Bloomberg news agency reported, citing people familiar with the matter, that Porsche AG would be valued at between 60 and 85 billion euros by interested parties. At the top end, the sum could be slightly higher than recently estimated by analysts.
Continental could miss annual targets
Continental shares fell by 5.6 percent among the weakest values in the leading index. A skeptical study by Bankhaus Metzler weighed heavily. Analyst Jürgen Pieper warned that the car supplier’s annual targets could be at risk. Among other things, he referred to the risk that demand in the tire business could cool down.
The shares of other auto suppliers were also under pressure. The papers of the former Conti subsidiary Vitesco lost 4.8 percent and the shares of Hella 2.7 percent. Jefferies analyst Himanshu Agarwal was pessimistic about the entire industry. The expert now takes a somewhat more conservative view of automobile production in 2023 and of the relationship between market prices and costs.
Among the stock exchanges in Europe, the leading euro zone index, the EuroStoxx 50, fell by 1.93 percent to 3603.68 points. Paris suffered similarly high losses, while London suffered a much smaller loss. In the US, the Dow Jones Industrial fell 1.7 percent at the European stock market close. The tech-heavy Nasdaq exchanges fell even more.
The euro was trading at $0.9993 early in the evening. The ECB set the reference rate at 1.0007 (Thursday: 0.9970) dollars. The dollar thus cost 0.9993 (1.0030) euros.
On the bond market, the current yield rose from 1.21 percent on the previous day to 1.23 percent. The Rex pension index fell by 0.14 percent to 133.47 points. The Bund future recently fell by 0.79 percent to 150.05 points.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
