Frankfurt (Reuters) – The upcoming interest rate decision by the US Federal Reserve on Wednesday evening gives investors on the European stock exchanges cautious optimism.
The Dax was 0.6 percent higher in the morning at 15,819 points. However, the psychologically important mark of 16,000 places, which the leading German index had briefly exceeded on Tuesday for the first time since January 2022, remained further away. “The danger for investors of being caught on the wrong foot by the upcoming monetary policy decisions is too great,” said Jürgen Molnar, strategist at broker RoboMarkets. The EuroStoxx50 also gained around half a percent to 4316 points.
According to analysts, investors are hoping that the US monetary authorities will hike rates by 25 basis points and then pause. “Should Fed Chair Jerome Powell emphasize that risks in the banking sector are a reason not to raise interest rates further, the stock market could continue to rally,” said analyst Konstantin Oldenburger of broker CMC Markets. On the other hand, should Powell make it clear that inflation is still well above target and that the problems in the banking sector are not really a concern, selling should begin.
OIL PRICES AND DOLLARS UNDER PRESSURE
Concerns about the further development of the global economy in view of weak US jobs data on Tuesday and the expected interest rate hike by the Fed pushed oil prices deep into the red again. The North Sea crude oil Brent and the light US variety WTI became cheaper by around two percent to 74.04 and 70.32 dollars per barrel (159 liters) respectively. On Tuesday they had lost five percent. They recorded the largest daily decline since the beginning of January.
Concerns about the economy also weighed on the US currency. The dollar index, which measures the value of the greenback against other major currencies, fell 0.4 percent to 101.52 points. The euro, in turn, gained as much to $1.1042.
CONSOLIDATED BALANCE SHEET IN THE SPOTLIGHT AGAIN
For companies, group figures were once again in the limelight. Quarterly sales below analysts’ expectations and a larger-than-predicted operating loss pushed Lufthansa’s stocks plummeting. The airline’s share price settled around 3.5 percent down after rising premarket and plunging 6.5 percent shortly after the start of trading. “The numbers are mixed. We expect high volatility in the stock,” said one trader. With a 40 percent increase in sales to seven billion euros, the operating loss in the first quarter was halved to 273 million euros. However, analysts polled by Bloomberg had expected sales of 7.6 billion euros and a loss of 254 million euros.
Thanks to additional business with existing customers, Teamviewer grew again at the beginning of the year. Nevertheless, investors reacted disappointed. The shares of the specialist for remote maintenance software fell by twelve percent in the MDax and thus gave up a large part of their gains of the past few days. Apparently, some investors are irritated by the missed average analyst forecasts, said a broker. However, these are exaggerated. Teamviewer slightly exceeded the lower forecasts of the top analysts. He thinks the numbers are solid.
In contrast, the papers of the major Italian bank Unicredit, which rose by five percent, were in demand for strong numbers. Like its European competitors, the bank benefited from rising interest rates and performed better than expected in the first quarter. That made the board more confident, who now expects a profit of 6.5 billion euros in 2023 after more than 5.2 billion recently.
(Report by Zuzanna Szymanska, edited by Kerstin Dörr. If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets).)