Before the ECB’s interest rate decision: investors avoid all risk

market report

Status: 04/14/2022 09:50

Ahead of the ECB’s interest rate decision, the DAX is virtually immobile, despite strong indications from overseas. Investors are waiting for signals from the central bank on future monetary policy.

In early trading, the DAX was up around 0.2% to just over 14,100 points. Yesterday, the main German index lost 0.3% to 14,076 points. Inflation concerns and the ongoing war in Ukraine remain the main negative factors. Before the European Central Bank’s (ECB) interest rate decision, no one was leaning out the window, a trader said.

Excitement ahead of ECB decision

Today at 1:45 p.m. the ECB will publish its decision on interest rates. Following this, ECB President Christine Lagarde will hold a press conference. Investors are hoping for information on the central bank’s future strategy. Every word from the head of the ECB must be weighed and interpreted, says Christian Henke, market expert at IG. “Above all, statements about the foreseeable end of the cheap money policy could be of great interest.” Until then, investors will want to avoid major risks.

Economists expect monetary policy normalization in the Eurozone to continue as announced due to high inflation. Given the high level of uncertainty emanating from the war in Ukraine, the ECB should continue to act cautiously, according to the thesis.

The euro rises

The Euro, meanwhile, extends yesterday’s gains and climbed above $1.09. The ECB meeting is also under the spotlight in the foreign exchange market: “The minutes of the March meeting have fired the imagination for an accelerated pace to combat high inflation. However, one must take into account the fact that ECB boss Christine Lagarde and chief economist Philip Lane has been hesitant lately and has pointed to the particular drivers of high inflation and economic risks,” Helaba market watchers write. In this regard, there could be slightly more cautious signals and this could calm the situation on the market, since the expectations of the ECB are already well advanced, the experts conclude.

Overseas Solid Specifications

US specs should support DAX. The Dow Jones closed up 1% at 34,564 points. The tech-heavy Nasdaq advanced 2% to 13,643 points. The broad S&P 500 gained 1.1% to 4,446 points.

Stock markets also evolved positively in Asia: the main Japanese index, the Nikkei, closed up 1.2% at 27,172 points. The Hang Seng in Hong Kong recently gained 0.7% to 21,532 points.

“There are a number of positive developments driving Asian equity markets today, said David Chao, global market strategist at Invesco in Hong Kong. US, which could mean US inflationary pressures soon and secondly, Chinese policymakers have recently been more encouraging about stabilizing and supporting economic growth. »

Slight drop in oil prices

Meanwhile, fluctuations in the oil market continue: in the morning, a barrel (159 liters) of Brent from the North Sea cost 108.05 US dollars. It was 73 cents less than Wednesday. The price per barrel of West Texas Intermediate (WTI) fell $1.13 to $103.12.

More recently, the prospect of growing demand for crude oil drove prices higher after the easing of otherwise strict corona measures in Shanghai. As the world’s second largest economy, China is one of the biggest consumers of oil.

Are traders reducing their purchases of Russian oil?

According to insiders, major global trading houses want to reduce their purchases of crude oil and fuel from Russian state-owned companies from mid-May. The move aims to avoid a clash with European Union (EU) sanctions against Russia over the war in Ukraine, people familiar with the matter told Reuters.

The EU has not imposed sanctions on Russian oil imports because some countries like Germany are heavily dependent on imports. However, trading houses have reduced their purchases in line with sanctions aimed at limiting Russia’s access to the international financial system. Some oil companies like Shell have already stopped buying Russian oil.

Benetton and the Blackstone family bid for Atlantia

In the fight for the Italian infrastructure group Atlantia, the Benetton family, associated with the financial investor Blackstone, submitted an offer of around 12.7 billion euros. They want to outdo Spanish property developer Florentino Perez and his ACS group. The offer foresees 23 EUR per share. The Atlantia group, in which the Benetton family holds 33%, is valued at nearly 19 billion euros. The standoff over Atlantia could also affect Germany’s biggest construction company, Hochtief – both Atlantia and ACS are involved.

Ericsson fears a fine

The Swedish network provider fears a fine from the American authorities for possible bribes to Iraqi militias. “Resolving these issues could result in a series of actions from the US Department of Justice and likely involve additional cash payments,” CEO Borje Ekholm said. The amount of the fine cannot be estimated. Ericsson also announced a drop in its quarterly operating profit to 4.7% (455 million euros) after 5.3 billion Swedish crowns the previous year.

Hermès: luxury and leather bags are still popular

Strong demand for leather and fashion bags pushed luxury goods maker Hermès into the first quarter. Compared to the same period of the previous year, revenues increased by a third to approximately 2.8 billion euros. Hermes benefited above all from sustained demand in the Americas and Europe, with growth rates in excess of 40%.

UK gives green light to Valneva vaccine

Britain was the first country to give the green light to the corona vaccine from the French pharmaceutical company Valneva. The responsible supervisory authority MHRA has approved the application for people between the ages of 18 and 50. This means that a total of six corona virus vaccines have now been approved in Britain.

Drägerwerk becomes more cautious

In the first quarter, the turnover of the medical and security technology group Drägerwerk fell from 792.1 million euros in the same period of the previous year to 649.5 million euros. The main reason for this was the significantly lower demand for ventilators and respiratory masks, he said. Until the end of last year these were in high demand due to the corona pandemic. EBIT was around minus €35 million in the first quarter of 2022 after plus €128.9 million in the first quarter of 2021.

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