European investors persist in expanding their portfolios within the Dax market
Tuesday's Market Shenanigans
The stock market continued its wild ride on Tuesday, with the Dax and EuroStoxx50 seeing significant gains. The Dax soared by 0.9 percent to hit 13,948 points, while the EuroStoxx50 advanced by 0.8 percent to 3,819 points. Wall Street acted as a catalyst, recovering from the initial shock of weak economic data from China at the beginning of the week.
A trader commented, "An upward momentum seems to be in play." The relaxation of pressure in the US markets last week sparked speculation that the US Federal Reserve might slow down the pace of its interest rate hike cycle, leading to a surge in stock prices. However, dismal figures on retail sales and industrial production in China at the start of the week raised concerns about a decreasing demand in the world's second-largest economy.
The ZEW index added to the gloom on Tuesday. Thomas Gitzel, chief economist of VP Bank, noted, "The threat of a catastrophic energy crisis is far from over, and inflation rates are eroding consumers' purchasing power." Market experts remain pessimistic about the prospects of the German economy. The corresponding barometer of the Centre for European Economic Research (ZEW) for the anticipated economy in the next six months dropped by 1.5 points to -55.3 in August, marking two consecutive decreases. Economists polled by Reuters anticipated stagnation.
Oil Prices Sliding Down
Speculations about diminished demand, particularly in China, continued to push down the oil price. North Sea Brent crude oil fell by up to two percent to $93.20 per barrel. Yeap Jun Rong, market strategist at broker IG Group, stated, "Commodity prices are under pressure as the Chinese economic data for July painted a weaker growth picture than anticipated, causing renewed concerns about demand prospects."
Individual stocks also made headlines. Delivery Hero's shares spiked to a six-month high on expectations for the current quarter. The food delivery service outperformed other stocks in the MDax with a price surge of up to 14.4 percent. "The possibility of actually achieving the profit targets is the trigger," said a trader. "The management has done a fantastic job on all fronts in 2022 so far," said Clement Genelot, analyst at investment bank Bryan Garnier. The company expects a seven percent increase in gross merchandise value in the third quarter compared to the period from April to June.
At the London Stock Exchange, the mining giant BHP benefited from an unexpectedly strong result and a record dividend. The shares of the world's largest mining company by market value rose by up to five percent at its peak. Rising prices for coal and copper resulted in BHP's highest profit in eleven years.
In the grand scheme of things, trade tensions, shifts in risk sentiments, and expectations about central bank policies play a crucial role in shaping equity markets like the DAX and EuroStoxx50, as well as oil prices. The ongoing US-China trade war, changing market sentiments, and Fed policies are significant influencers, with recession fears, trade-related disruptions, and technical momentum acting as key drivers.
- The upward momentum in the stock market, as observed on Tuesday with the Dax and EuroStoxx50 seeing significant gains, could be influenced by the speculation that the US Federal Reserve might slow down its interest rate hike cycle.
- Despite the surges in stock prices, concerns about a decreasing demand, particularly in China, continue to push down the oil price, with North Sea Brent crude oil falling by up to two percent.
- In the business world, individual stocks like Delivery Hero's and BHP have made headlines, with Delivery Hero's shares spiking to a six-month high and BHP's shares rising by up to five percent at its peak, both due to positive quarterly expectations and strong results respectively.
- The global finance landscape is shaped by various factors such as trade tensions, shifts in risk sentiments, and expectations about central bank policies, all of which play a significant role in shaping equity markets like the DAX and EuroStoxx50, as well as oil prices.
- The threat of a catastrophic energy crisis and inflation rates eroding consumers' purchasing power, as noted by Thomas Gitzel, chief economist of VP Bank, add to the overall gloom in the industry and the business world.
