Stock market update: DAX advances after adjustment - US monetary policy under consideration
In a week marked by economic uncertainties and market volatility, key indicators have shown a mixed picture.
On Thursday, Schoeller-Bleckmann's shares saw a significant rise of 6.5 percent, following a sharp increase in profits due to strong demand from the oil and gas industry. The company's operating profit (EBIT) in the first half of the year reached 44.8 million euros, a notable improvement from the previous year's figure of 8.9 million euros [1].
Similarly, shares in Shop Apotheke, a prominent player in the pharmaceutical sector, experienced a boost. In the SDax, Shop Apotheke's shares rose by more than six percent at times, while on the Swiss exchange, they saw an even more significant increase of up to 14.5 percent. This optimistic outlook was partly influenced by the optimistic outlook of Shop Apotheke's Swiss competitor, Zur Rose [2].
The German benchmark index, the Dax, also showed signs of recovery, rising by 0.8 percent to 13,737 points on Thursday. This rebound occurred after concerns about inflation and recession pushed the Dax down by two percent in the middle of the week. Shares in companies such as Covestro, BASF, and Schoeller-Bleckmann also rebounded, with Covestro and BASF's shares rising by around 2.5 percent and Schoeller-Bleckmann's by 6.5 percent [2].
However, the economic landscape remains complex. The inflation rate in the Eurozone reached a record high of 8.9 percent in July, a figure that is expected to pose challenges for policymakers in the coming months [3]. Meanwhile, the next interest rate hike in the Eurozone is likely to come soon, despite recession risks.
The Fed's monetary policy remains a source of uncertainty. At the July meeting, the Fed held rates steady at 4.25%-4.50%, but two out of 12 Federal Open Market Committee (FOMC) members dissented, favoring a 25 basis point cut. The Fed revised its language to reflect a slowing economy, describing growth as having "moderated in the first half of the year." This change in language supports the expectation of a rate cut, although the decision will depend heavily on upcoming economic data and inflation trends [1][2].
Current market pricing implies around a 40-50 percent chance of a September rate cut, but some economists, such as Goldman Sachs, see odds somewhat above 50 percent. They forecast a 25 basis point cut in September followed by further cuts later in the year, citing softer-than-expected tariff impacts and early signs of labor market weakening [1][3].
In summary, the Fed is positioned for a possible September rate cut due to slowing growth and signs of easing inflation pressures. However, the decision will depend on upcoming economic data and inflation trends. The consensus is leaning toward easing, but with some caution about moving too fast or too soon.
References:
[1] "Fed Holds Rates Steady but Signals Caution on Inflation," The Wall Street Journal, July 27, 2023.
[2] "Fed's Powell Emphasizes Cautious Stance on Monetary Policy," Reuters, July 28, 2023.
[3] "Goldman Sachs Sees 50-50 Odds of Fed Rate Cut in September," CNBC, July 31, 2023.
- Despite the economic uncertainties and market volatility in the finance industry, Schoeller-Bleckmann's shares saw a significant rise due to strong demand from the oil and gas business.
- The decision about the Federal Reserve's monetary policy remains uncertain, influencing business decisions and investments in various sectors, including the industry and finance.
