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SAP beats DAX, quarterly season starts – Munich Stock Exchange column

Plus according to the zigzag rate: The German stock markets fluctuated significantly last week, but ultimately decided to make profits. Once again, investors were torn between hopes of a rapid economic recovery from the corona crisis and fears that it would not. Record numbers of new infections in the United States and some less-than-expected economic data raised concerns, while positive surprises in the economic numbers that were also fueled hopes. Some company figures were also convincing, which led to record highs in some cases.

In a weekly comparison, the German stock index (Dax) rose 0.8 percent to 12,633.71 points. The price of index member SAP rose more significantly. A surprisingly high turnover and profit in the second quarter caused the software company’s price to rise to a record level at times. The MDax advanced 0.3 percent weekly to 26,673.94 points. In addition to Teamviewer, the index values ​​Gerresheimer and Zalando also set new record highs over the course of the week, with the latter online fashion retailer declining again at the end of the trading week. The TecDax rose 1.5 percent in a weekly comparison to 3,049.87 points. Market participants believe that many technology stocks should benefit from the trends such as digitization, home office or sensor technology, which have been strengthened by the corona pandemic, which is why profits in this area have recently been higher. The m: access All-Share improved by 0.7 percent in a weekly comparison to 2,678.75 points. Among the big winners of the week were the real estate stocks Consus Real Estate and Immovaria Real Estate with double-digit percentage price increases.

Last week, a more skeptical view of the consequences of the corona pandemic prevailed on the German bond markets and the prices of the federal papers, which are considered safe, rose. This was mainly due to some weaker than forecast economic figures and the rising number of infected people in the USA. The yield on the trend-setting ten-year federal bond fell in a weekly comparison from -0.44 to -0.47 percent. The current yield fell noticeably from -0.46 to -0.51 percent.

Like their German counterparts, the US stock exchanges made an up and down ride last week, but in the end there was also a plus. Record levels of new infections have been topped by hopes of medical advances and an economic recovery. The Dow Jones index gained 1.0 percent to 26,075.30 points compared to the previous Thursday (on Friday last Friday, there was no trading due to the upcoming national holiday, July 4). The broader S&P 500 index rose 1.8 percent to 3,185.04 points. The technology-heavy Nasdaq 100 index climbed 4.8 percent to 10,836.33 points, and there was another record high last Friday.

outlook

In the current week, what is happening on the German stock markets should once again be determined by which view of the corona crisis and its consequences will prevail this time: the expectation of a rapid economic recovery or the fear of a second wave including new restrictions, which in turn are likely to be hard on the economy. If you look at the latest economic data, you could be inclined towards the former. Because even if the pandemic has hit a large number of industries and companies very strongly and the numbers are still significantly below pre-crisis levels, there was mostly a clearly positive trend.

Market participants may also want to know whether this will continue in the coming days. Here, the focus is on the ZEW economic expectations from Germany, from the USA, retail sales, consumer confidence and individual purchasing manager indices are likely to be of particular interest. In addition, investors should also look at figures from China to assess how and whether the economic recovery seen last will continue there.

In addition to the macro data, a number of company figures are also due this week, the reporting season is getting underway in the USA. The major banks Bank of America, Citigroup, Goldman Sachs, JP Morgan and Morgan Stanley, among others, present their quarterly results, which could also affect the prices of local bank values. Johnson & Johnson and Netflix also publish figures. In general, investors should pay particular attention to the outlook for companies.

Most observers do not expect new measures from the Council meeting of the European Central Bank (ECB). After the large number of support measures, the ECB should now wait and see what effect they have. However, market participants are likely to pay close attention to the ECB’s explanations and advice on how to proceed.

Selected important dates of the week

Monday. July 13: Wholesale prices in Germany
Tuesday, July 14th: ZEW economic expectations (Germany); Consumer prices in Germany; Industrial production in the euro area; Consumer prices in the US; China’s trade balance
Wednesday, July 15th: Industrial production in the USA; New York Empire State Index (USA); Federal Reserve’s Beige Book; Outcome of the Bank of Canada Council meeting
Thursday, July 16: Result of the Council meeting of the European Central Bank; Trade balance of the euro area; Retail sales in the US; Philadelphia Fed Manufacturing Index (USA); China’s gross domestic product
Friday, July 17th: consumer prices in the Eurozone; US Consumer Confidence at the University of Michigan; Home construction starts and permits in the United States

Author: Dr. Robert Ertl, board member of Bayerische Börse AG

At a glance – chart and news: SAP

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