Frankfurt (Reuters) – Nervousness on the stock markets is increasing again.
Investors fear further escalation in the Middle East. The Dax and EuroStoxx50 were each 0.3 percent lower at 15,211 and 4,141 points respectively on Wednesday morning. “Peace in the Middle East is a long way off,” says Christian Henke, market strategist at IG, summing up the mood. The radical Islamic Hamas blames an Israeli air strike for the explosion in a hospital in Gaza City, which may have killed hundreds. Israel, meanwhile, spoke of a failed rocket launch by the extremist group Islamic Jihad.
In addition, the season for quarterly reports is underway. After the stock market closes in the USA, the figures from the software giant SAP, the electric car manufacturer Tesla and the streaming service Netflix will be available, among others. Meanwhile, encouraging signals came from China: According to government figures, the economy there grew more than expected in the third quarter thanks to increasing domestic demand.
OIL MORE EXPENSIVE – INVESTORS LOOK FOR HEDGES
The uncertainty could once again be seen in raw material prices. The gold used as hedge rose in price by 0.8 percent to $1,938 per troy ounce. Supply fears drove up prices for North Sea oil Brent and the light US grade WTI by around 2.5 percent each to $92.03 and $88.91 per barrel (159 liters), respectively. “The cancellation of a summit between (US President Joe) Biden and Arab leaders reduces the likelihood of a diplomatic solution to the Israel-Hamas conflict,” said Vivek Dhar, an analyst at the Commonwealth Bank of Australia. The markets are nervous about an impending Israeli ground offensive. “A long occupation looms as a scenario, driving Brent oil futures toward $100 a barrel as the risk of the Israel-Hamas conflict expanding and Iran potentially being drawn directly into it increases.”
INTEREST INTEREST CONCERNS REMAIN – POUND FIRMER AFTER INFLATION DATA
In addition to the geopolitical tensions, many investors were also concerned about the possibility of interest rates remaining high. Eurozone bond yields continued to rise. The interest rate on ten-year federal bonds rose by two basis points to a 12-day high of 2.90 percent. Robust US economic data heralded a sell-off in bonds on Tuesday. Market participants see the strength of the US economy as opening the door for further interest rate increases by the Federal Reserve. Central bankers have recently emphasized that they will keep interest rates at high levels until inflation is overcome.
The consumer price development in Great Britain also fueled interest rate speculation there. Core inflation fell less than expected. The pound rose 0.2 percent to $1.2204.
ASML AWAY – ADIDAS IN QUESTION – VOLVO AT RECORD HIGH
Adidas was in demand on the German stock market after the sportswear manufacturer raised its forecast for the full year. Adidas shares jumped 5.3 percent to a six-week high of 180 euros. In the wake of this, Puma stocks rose in price by up to 4.7 percent.
Despite a rise in profits in the quarter, investors pulled the ripcord on ASML amid a bleak outlook. The shares of the Dutch chip supplier lost up to five percent to 544.30 euros. According to the company, 2024 will be a “transitional year” and stagnating sales are to be expected.
After a surprisingly strong increase in profits in the quarter, investors bought into Volvo. The shares of the Swedish truck manufacturer, which also produces construction machinery and engines, rose up to 4.2 percent to 223.65 crowns in Stockholm, marking a record high. Operating profit grew by 61 percent to 19.1 billion crowns in the third quarter compared to the previous year.
(Report by Anika Ross. Edited by Ralf Bode. 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).)