Monday , January 24 2022

Investors are afraid of new economic constraints: week of the stock market ends with losses


Concerns about an even sharper lockdown dragged the stock markets further down at the end of the week. Because in particular the economy is likely to be affected. Corona is also the trust of consumers in the US.

Despite abundant financial aid, the Americans held back with purchases, even during the important Christmas business. In December, U.S. retail sales fell for the third straight month. The minus was 0.7 percent. Economists had expected a turnaround and at least stagnant income. The record number of infections in the US and the weak labor market had an effect.

In addition, the mood of American consumers deteriorated sharper than expected at the beginning of the year. The consumer confidence barometer determined by the University of Michigan fell in January to 79.2 points from 80.7 points in December. Experts had expected a smaller decline.

Wall Street limits losses

The disappointing economic data in the US hit Wall Street. The Dow Jones lost nearly 0.6 percent. At times, the losses were even higher. The broader S&P 500 lost 0.7 percent. Before the long weekend and the swearing-in of new president Joe Biden on Wednesday, many investors did not want to take the risk. The US stock market closed on Monday due to Martin Luther King Day.

Doubts about Biden’s trillion pack

It planned nearly two trillion dollars of corona aid package from future US President Biden could not raise the mood of investors. They are afraid that the government will probably increase taxes sharply to finance it. In its current form, the Biden program has little chance of success, said Thomas Gitzel, chief economist at VP Bank. Because praying for parts of it requires the approval of Republican senators to reach the required majority.

Big US banks can not convince

Even the good start to the US reporting season could not convince Wall Street. Following the quarterly results, some of which were better than expected, the shares of US banks JPMorgan, Citigroup and Wells Fargo struggled. “Bank shares have been rising for a few weeks and there is a lot of good news in prices,” said one trader. Wells Fargo and Citi shares fell about six percent. JPMorgan shares lost about one percent.

DAX annual profits are almost gone

In the wake of the weak Wall Street, the DAX suffered the biggest daily loss this year. It closed 1.4 percent lower at 13,787 points after a climb last year to a record high a week ago. On a weekly basis, the leading German index fell 1.9 percent. The annual profits are almost gone. Market participants spoke on Friday of a consolidation following the strong start to the year and overdue profit gains.

Fear of the “mega-lockdown”

Following the recent record rally, investors shrugged off new risks due to the ongoing corona pandemic and the discussion about an even harder lockdown, the “mega-lockdown”. The federal and state governments are expected to meet on Tuesday to discuss further tightening of coronavirus restrictions. According to media reports, there is an institution of local public. and long-distance transportation and even thought about an exit trip. That illustrates the seriousness of the situation, said market analyst Timo Emden of Emden Research. “The fear that the economy will force the German economic engine to close again in the face of a closure of domestic companies leaves investors only touching securities with the tip of their fingers.”

Pfizer reduces delivery volume

The speed of delivery of fax manufacturers also worries investors. The American pharmaceutical company Pfizer surprisingly announced this afternoon that it would temporarily reduce the delivery volume of its corona vaccine, which it developed together with BioNTech, to European countries.

More locks in China

Concerns about Corona are also increasing in other parts of the world. The resurgence of the pandemic in China is causing unrest. The Beijing government has blocked several cities. China will probably be the only major economy worldwide that recorded growth in the Corona year. According to economists, the economy in the Central Kingdom grew by about 2.0 percent last year due to the corona pandemic – slower than in about four decades. In 2019, GDP increased by 6.1 percent.

Oil prices are falling

The recent cuts in the Middle Kingdom could dampen demand from the world’s largest oil buyer, warned stockbrokers. Oil prices slipped at the end of the week. The North Sea brand Brent fell in price by 2.3 percent to $ 55.11 per barrel (159 liters). As a result, oilseeds came under pressure.

US dollars demanded

The euro remained groundless and traded at just $ 1.2075 last night. Several triggers were cited as reasons on the market, including disappointing quarterly figures from major U.S. banks, persistent high corona infections in many countries and delayed delivery of corona vaccines in Europe. The dollar as the world reserve currency was targeted, many other currencies lost value.

JPMorgan made billions

The booming securities trade in the financial markets and lower credit risks during the Corona crisis brought JPMorgan a surprising profit jump in the fourth quarter. The largest U.S. cash house earned $ 12.1 billion in the last quarter of 2020, as much as never before.

Citi profit falls in

The US bank Citigroup, meanwhile, had to make significant cuts in the fourth quarter. Profit fell seven percent to $ 4.63 billion. Over the past fiscal year, profits fell by 41 percent. However, the Citi exceeded analysts’ expectations. Bank manager Michael Corbat refers to “massive economic consequences of Covid-19”. The weaker numbers are also due to higher costs and taxes.

Less standard loans

Due to the prospect of a rise in the economy, the institutes expect less defaults. By the summer, the economy will be “very healthy” again, JP Morgan boss Jamie Dimon said on Friday. In the fourth quarter, JPMorgan, Citi and Wells Fargo released some of their loan loss facilities. The six largest U.S. banks had a total of $ 65 billion reserved for impending defaults in the first nine months of the year, about half of that in the second quarter alone. At that time, however, several institutes had already signaled that this was the climax.

Red lantern for Deutsche Bank

In the wake of the losses of major US banks, Deutsche Bank’s shares lost 3.7 percent. They were bottom of the Dax. Only two values ​​in the leading German index ended positive on Friday: Beiersdorf and Henkel.

SAP achieves annual goal

The SAP share closes a bit lower. Last year, the largest German software company reached its earnings target, which was reduced twice. The operating profit was 8.28 billion euros. In the current year, however, the result is expected to drop to 7.8 to 8.2 billion euros.

Siemens Energy sued by GE

Siemens Energy shares fell more than six percent. The American business group General Electric (GE) has filed a lawsuit against Siemens Energy in the US. GE accuses the competitor of using illegal means to take advantage of offers from gas turbines to an energy supplier. The case dates back to May 2019. At that time, Siemens Energy was still part of the Siemens group in Munich. GE put the damage at more than a billion dollars (about 820 million euros).

New league for Varta?

Reports about Samsung and LG’s microphone battery plans for wireless headphones dragged Varta shares down nearly five percent. New Samsung batteries seemed very similar to Varta’s new generation batteries, wrote an analyst at Stifel Europe. The more Asian companies involved in this field, the more Varta is likely to lose market share.

Hella with a weaker rating of analysts

Shares in auto supplier Hella were among the weakest stocks in the MDAX. Morgan Stanley has downgraded the shares to “Underweight” from “Equal-Weight”, but increases the price range from 40 to 42 euros.

Nordex receives fewer orders

The wind turbine manufacturer Nordex registered a three percent reduction in order to 6.02 gigawatts last year. The company is confident that it can build on the latest developments in the current year.

SNP lacks annual goals

In the SDax, the shares of Schneider-Neureither & Partner (SNP) fell by almost ten percent. The IT and software vendor missed its own expectations last year. The reason was the failure of a hopeful partner contract with a leading international IT service provider, which, contrary to expectations, did not materialize. In addition, projects have been postponed from the fourth quarter to the first quarter of 2021, the company announced.

DBAG surprises positively

The shares of Deutsche Beteiligungs AG (DBAG) have meanwhile moved into late trading by three percent. The private equity firm expects significantly more profit for the past quarter than a year earlier. The reason for this is a likely significantly increased result of gross valuation and disposal, the SDax company surprisingly announced on Friday night in Frankfurt. At 30 to 40 million euros, it will be well above the figure for the same quarter of the previous year, which was only 100,000 euros. The exact quarterly figures should be published on February 10th.

Government opposes Carrefour’s acquisition

A takeover of French retail group Carrefour by Canadian group Alimentation Couche-Tard is becoming increasingly unlikely. “My position is clear: I say no in a friendly but very resolute manner,” French Finance Minister Bruno Le Maire announced. Food security in France is at stake. This is a strategic interest of France. “That’s why we do not sell large retail groups.”

Whatsapp proposes changes for data protection

After violent protests from users, the messenger service Whatsapp has postponed its changes in data protection. The planned change in the terms of use will be postponed by three months, the company said on Friday. Users outside the EU can now agree to the new regulations until 15 May. The amendment stipulates that more data can be passed on to the parent company Facebook. The changes have drawn criticism because users outside Europe who do not agree to the terms before February 8 will be excluded from the app. As a result of the changes, WhatsApp competitors Telegram and Signal registered millions of new registrations. By mistake, the shares of the medical technology company Signal experienced a huge rush on the stock market.

Xiaomi is on the blacklist

A few days before the end of President Donald Trump’s term, the US government is targeting other Chinese companies such as smartphone maker Xiaomi. The government has blacklisted companies from the Ministry of Defense for alleged links to the Chinese military. U.S. investors should sell shares in the company by the end of November. The government of Trump’s successor Biden can reverse the measures. But the stock market does not seem to believe it at the moment.

The Tagesschau reported on this topic on January 15, 2021 at 12:00.

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