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Tag: DAX

  • CNBC Daily Open: Moving past sticky core inflation

    CNBC Daily Open: Moving past sticky core inflation

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    Prices are displayed in a store window in Brooklyn on August 14, 2024 in New York City. 

    Spencer Platt | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Stubborn core inflation
    Prices in the U.S. rose 0.2% in August, the Bureau of Labor Statistics reported, in line with the Dow Jones consensus. The 12-month inflation rate was at 2.5%, the lowest since February 2021. However, core CPI, which excludes food and energy prices, ticked up 0.3%, 10 basis points higher than expected.

    Rebound rally
    Major U.S. indexes closed higher in a choppy session on Wednesday, lifted by technology stocks. Asia-Pacific markets were trading higher on Thursday. Japan’s Nikkei 225 jumped 3.43% and the Taiwan Weighted Index rose 3%. Chip-related Asian stocks including Tokyo Electron, Advantest and TSMC rose, tracking the rally in U.S. technology stocks.

    UBS CEO sees soft landing
    Sergio Ermotti, Group CEO of UBS Group AG, told CNBC that investors expecting the Fed to cut rates aggressively are getting “ahead of the curve.” Sticky inflation remains the “most important” issue, he added – August’s core CPI surprised to the upside. However, Ermotti still sees “the outlook [as] pretty consistent with a soft landing.”

    Harris or Trump? Little difference for China
    Regardless of who wins the U.S. Presidential elections, the country’s trade ties with China will remain tense, said Carlos Casanova, senior economist at Swiss private bank UBP. Donald Trump has proposed tariffs of up to 100%, while Kamala Harris is expected to stick with Joe Biden’s tariff policy that not only retained Trump-era tariffs but also escalated them.

    [PRO] Opportunities for semiconductor stocks
    Semiconductor stocks have been the market’s darling this year and are responsible for pushing the S&P 500 to consecutive fresh highs. However, since July, they’ve had wild swings. Still, with some chip stocks being undervalued, they appear to be good buys amid this volatility, said analysts.

    The bottom line

    On the surface, Wednesday looked like a great day for investors.

    The S&P 500 climbed 1.07%, the Dow Jones Industrial Average added 0.31% and the Nasdaq Composite shot up 2.17%.

    However, those numbers are hiding turmoil under their pretty facades.

    The S&P dropped around 1% during trading but eventually managed to claw back losses and close more than 1% higher by the end of the day. It’s the first time the broad-based index has done so since October 2022.

    The consumer price index for August precipitated the initial fall. Core inflation, to which the Fed pays more attention because it more accurately reflects price movements, came in a bit higher than expected for the month.

    Core inflation was higher than the headline number because food and energy prices are stripped out from the former. And both were mild for the month: Food prices were only 0.1% higher, suggesting no pets need to be eaten, while energy costs fell 0.8%.

    Still, that data means the Fed’s unlikely to make a jumbo-sized 50-basis-point cut. Disappointment translated into stocks dropping.

    Even with inflation remaining difficult to tame, it doesn’t mean consumers are worse off. Real earnings rose 0.2% for the month, showed a separate Bureau of Labor Statistics report, which means the rise in income outstripped price increases.

    That might have helped the intraday rebound in the S&P.

    As for the Nasdaq, it was buoyed by technology stocks, which experienced a huge bounce from the previous days’ falls. Nvidia popped 8%, probably on news the U.S. might let the chipmaker sell advanced chips to Saudi Arabia, according to Reuters.

    But there might be more choppiness ahead in markets. The U.S. government is, once again, close to a shutdown because of politicking over government funding. It’s almost like the U.S. House of Representatives has no concept of a plan.  

    – CNBC’s Jeff Cox, Pia Singh and Lisa Kailai Han contributed to this story.

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  • CNBC Daily Open: Looking past sticky core inflation

    CNBC Daily Open: Looking past sticky core inflation

    [ad_1]

    Prices are displayed in a store window in Brooklyn on August 14, 2024 in New York City. 

    Spencer Platt | Getty Images News | Getty Images

    This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Stubborn core inflation
    Prices in the U.S. rose 0.2% in August, the Bureau of Labor Statistics reported, in line with the Dow Jones consensus. The 12-month inflation rate was at 2.5%, the lowest since February 2021. However, core CPI, which excludes food and energy prices, ticked up 0.3%, 10 basis points higher than expected.

    Choppy trading
    Major U.S. indexes closed higher in a choppy session on Wednesday, lifted by technology stocks. The regional Stoxx 600 index ended the day flat following volatile trading. Country-specific indexes were mixed, however. Germany’s DAX added 0.35% while France’s CAC 40 lost 0.14%.

    Oracle shares jump
    Oracle’s shares have surged by double-digit percentages following its earnings reports so far this year. After Oracle popped 11% on Tuesday, the company’s share prices are up 49% year to date, second only to Nvidia’s 136%. “After 13 years of single-digit organic total revenue growth, Oracle is reaccelerating into the double digits,” said JMP analysts.

    Buffett sells more BofA
    Berkshire Hathaway isn’t done selling Bank of America shares. Warren Buffett’s conglomerate sold 5.8 million BofA shares on Friday, Monday and Tuesday, netting around $228.7 million for them. BofA dropped to Berkshire’s third-biggest holding, having long occupied the second spot.

    [PRO] Nothing to short here
    Bank stocks fell on Tuesday on fears of a slowdown in the sector. However, Steve Eisman, senior portfolio manager at Neuberger Berman, said he was not worried about the health of banks — or the economy, for that matter. And when the person who spotted the weakness in subprime mortgage loans speaks, it’s good to listen to him.

    The bottom line

    On the surface, Wednesday looked like a great day for investors.

    The S&P 500 climbed 1.07%, the Dow Jones Industrial Average added 0.31% and the Nasdaq Composite shot up 2.17%.

    However, those numbers are hiding turmoil under their pretty facades.

    The S&P dropped around 1% during trading but eventually managed to claw back losses and close more than 1% higher by the end of the day. It’s the first time the broad-based index has done so since October 2022.

    The consumer price index for August precipitated the initial fall. Core inflation, to which the Fed pays more attention because it more accurately reflects price movements, came in a bit higher than expected for the month.

    Core inflation was higher than the headline number because food and energy prices are stripped out from the former. And both were mild for the month: Food prices were only 0.1% higher, suggesting no pets need to be eaten, while energy costs fell 0.8%.

    Still, that data means the Fed’s unlikely to make a jumbo-sized 50-basis-point cut. Disappointment translated into stocks dropping.

    Even with inflation remaining difficult to tame, it doesn’t mean consumers are worse off. Real earnings rose 0.2% for the month, showed a separate Bureau of Labor Statistics report, which means the rise in income outstripped price increases.

    That might have helped the intraday rebound in the S&P.

    As for the Nasdaq, it was buoyed by technology stocks, which experienced a huge bounce from the previous days’ falls. Nvidia popped 8%, probably on news the U.S. might let the chipmaker sell advanced chips to Saudi Arabia, according to Reuters.

    But there might be more choppiness ahead in markets. The U.S. government is, once again, close to a shutdown because of politicking over government funding. It’s almost like the U.S. House of Representatives has no concept of a plan.  

    – CNBC’s Jeff Cox, Pia Singh and Lisa Kailai Han contributed to this story.

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  • Europe stocks close 2.2% lower amid global downturn as volatility index spikes to Covid-era high

    Europe stocks close 2.2% lower amid global downturn as volatility index spikes to Covid-era high

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    LONDON — European markets fell sharply at the start of the new trading week, though pared losses towards the end of the session amid a global stock sell-off.

    The regional Stoxx 600 index closed 2.17% lower, pulling back from declines of more than 3% as the technology sector clawed back some ground to end 0.9% lower.

    All sectors and major bourses nonetheless finished in the red, with utilities and oil and gas stocks both losing over 3%.

    Strategists pointed to several causes for the downturn across Europe, Asia and the U.S. which began last week, including fears of a U.S. recession and rapid Federal Reserve Rate cuts, the recent hawkish pivot by the Bank of Japan and crash in the yen “carry trade,” and an ongoing re-rating of the tech sector.

    The VIX, a measure of expected market volatility, jumped more than 100% to 64.06 during Monday trade before cooling to around 35, still its highest level since 2020.

    U.S. stocks saw steep losses through the morning, with the Dow Jones Industrial Average losing nearly 1,000 points, or 2.5%, as the tech-heavy Nasdaq Composite fell 2.6%.

    Asia-Pacific markets had led the sell-off on Monday. Japan stocks entered a bear market, with the Nikkei 225 losing 12.4% to log its worst day since 1987.

    The broad-based Topix also saw a rout, tumbling 12.23%, while heavyweight trading houses such as Mitsubishi, Mitsui and Co., Sumitomo and Marubeni all plunged more than 14%.

    The yen, meanwhile, rose to its highest level against the dollar since January as U.S. Treasurys gained.

    On the data front, demand for U.K. services rose in July, increasing to 52.5 from 52.1 the previous month, fresh purchasing managers’ index data showed Monday. Corresponding data for Italy and Spain also pointed to sustained growth in the sector but at a slower pace than previous months.

    Stock picks and investing trends from CNBC Pro:

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  • French stocks rise 0.5% after left-wing coalition clinches surprise election win

    French stocks rise 0.5% after left-wing coalition clinches surprise election win

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    LONDON — French stocks moved higher on Monday as markets reacted to a surprise win for the left in the country’s parliamentary election.

    The CAC 40 erased earlier losses to rise 0.5% by 10:00 a.m. London time (5 a.m. ET). The euro was flat against the dollar, and trading in bond markets was also relatively muted.

    The U.K.’s FTSE 100 was steady, while Germany’s DAX was 0.43% higher and the FTSE MIB was up around 1%. The pan-European STOXX 600 was 0.3% in the green.

    France’s left-wing New Popular Front won the largest number of seats in this weekend’s parliamentary elections, scuppering an expected surge for the far-right. However, the coalition failed to secure an absolute majority, early data showed, leaving markets digesting the possibility of a hung parliament.

    François Digard, head of French equity research at Kepler Cheuvreux, said a hung parliament was what the market was expecting.

    “You have a hung parliament as expected so last week, the market has played this out … It was just expected to be more right-wing and at the end it is left-wing,” he told CNBC on Monday.

    Deutsche Bank strategists added that markets will be suspicious of the New Popular Front’s “fiscally aggressive” spending and taxation plans.

    “Last night the far-left were already talking about wealth taxes and increases on taxes on corporates which won’t be market-friendly. However trying to build a government that has any kind of stability looks a very high bar this morning. Political paralysis for the next 12 months seems the most likely outcome,” they added.

    It comes after a general election in Britain last week, in which the opposition Labour Party win a landslide victory, unseating the Conservatives after 14 years.

    In corporate news, soft drinks maker Britvic has agreed a takeover bid of £3.3 billion ($4.2 billion) from Carlsberg, at an offer of 1,290 pence per Britvic share. This was an improved bid from Carlsberg which first offered 1,200 pence per share but was rejected.

    There are no major corporate earnings due out on Monday. It’s also quiet on the data front, with just German trade data due.

    In Asia-Pacific, stocks were mixed Monday. In the United States, futures ticked lower as investors looked ahead to inflation data for hints on this year’s market rally and the next steps by the Federal Reserve. The June consumer price index is due Thursday, with producer price index data due Friday.

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  • Your Weekend Playlist: New Music To Listen To This Friday

    Your Weekend Playlist: New Music To Listen To This Friday

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    I know I always say this…but I’m particularly excited for this weekend. No, it’s not because the weather has been so beautiful that I don’t want to sit inside on my laptop (although that’s true). It’s because we’re approaching Memorial Day Weekend- and for me, a New Jerseyan, that means going to the beach.

    No matter if you have family parties, plans with your friends, or aspire to sprawl on the sand this weekend…we all need one thing, and that’s a killer playlist to be the soundtrack for our plans. You’ve probably spent the week participating in the streaming war between Billie Eilish (HIT ME HARD AND SOFT) and Taylor Swift (THE TORTURED POETS DEPARTMENT ANTHOLOGY), but we all know there’s always room for new music.

    And that’s where I come in, dear reader. If you’re new here, I create a weekly playlist to get you ready for your weekend and make you look cool to your friends. You’ll never be in need of new tunes while I’m around. And since it’s a special long weekend, I have a special lengthy playlist for you!

    Now that we’re all on the edge of our seats…let’s get listening!!

    Louis The Child x Madeon – “Believe It” 

    Everyone knows you need a classic house song to start your summer off right and that’s what “Believe It” is. A dynamic track that starts off strong and somehow builds throughout its entirety, “Believe It” will get your friends up and dancing immediately. But this is no surprise when the collab is coming from two seasoned veterans like Madeon and Louis The Child.

    Vincent Mason – “Really Don’t Love Me”

    Country artist Vincent Mason has released his EP, Can’t Just Be Me, alongside single “Really Don’t Love Me” today. With a plethora of instruments from guitar to harmonica to a background drumbeat, this symphony perfectly complements Mason’s crooning tone. He’s the next big thing in the country world, and “Really Don’t Love Me” spins the tale of an ex who revealed their true colors into a hit track.

    Empire Of The Sun – Music On The Radio

    With their new album, Ask That God, coming out July 26, Empire of the Sun is preparing to release their first album in eight years. “Music On The Radio” reminds us that Empire of the Sun has not missed a beat- creating an ethereal disco-esque track that is perfectly timed for summer. It’s light, catchy, and refreshing, indicating a new era of the duo who seem to get it right every single time.

    “To me this song is like a teenager rebelling against his imaginary emotions. It’s penned in only that unique way Lord Littlemore can bring words to life. The bass wraps it’s arms around you in some kind of hypnotic groove and you’re powerless to its charms” says band member Luke Steele

    Jeremy Zucker, Lauv, Alexander 23 – “Cozy” 

    Jeremy Zucker, Lauv, Alexander 23 create a perfect blend of their smooth vocals with “Cozy.” Their voices and styles are ideal for this collaboration that truly makes you feel cozy when you’re listening to it. It’s an Avengers-style collab for indie fans and music fans alike.

    “When Jeremy, Alexander and I went into the studio to make a song, I knew we had to create something super fire. I’m so excited you guys can hear it now too. I feel like our fans have waited for us to collaborate for so long, and I truly just love these boys and think they’re so talented, so it’s an honor to make a song with them.” says Lauv.

    Dax- “A Real Man” 

    Dax has the power to seamlessly glide from genre to genre within one song and it creates a hit. “A Real Man” ebbs and flows between country, R&B, and hip-hop without missing a beat. It’s introspective and creative, telling the story of a woman wanting a “real man” in a relationship…but never quite living up to it.

    “The worst place I’ve ever been trapped was in the cage of someone’s expectations that I couldn’t live up to. The constant feeling of being unappreciated is a hammer that will beat the love out of your heart until you have none left to give.” – Dax

    Sabrina Sterling – “Soon” 

    Sabrina Sterling’s soft cadence is reminiscent of favorites like Billie Eilish or Phoebe Bridgers…but she creates a song entirely her own with “Soon.” Her voice shines through as she sings this heartbreaking ballad about how she’s afraid her partner is leaving sooner than she wants. It’s both nostalgic and heart wrenching, but incredibly beautiful nonetheless.

    Mont Duamel- “Imagine” 


    “Imagine” transports you into a different realm of music- with layered vocals and an instrumental backing that just makes sense…this song will be perfect for your long drives with the windows down, or maybe even when you’re lounging on the beach with your friends. Mont Duamel creates an adventurous track with meticulous production that is evident as you listen.

    “I feel like this new body of music I’ve been making feels human and organic but also is getting pushed into a more otherworldly, personal, intimate kind of place.” Mont says.

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    Jai Phillips

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  • European markets muted as global stocks search for new highs

    European markets muted as global stocks search for new highs

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    The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 13, 2023.

    Staff | Reuters

    LONDON — European stocks were little changed on Thursday as global markets search for new record highs to close out the year.

    The pan-European Stoxx 600 index hovered around the flatline by mid-morning, with health care stocks adding 0.5% while oil and gas stocks dropped 0.6%.

    The continental blue chip index was last trading around the 478.66 mark, not far below the index’s record closing high of 483.44 notched in November 2021.

    Stateside, U.S. stock futures were little changed in early premarket trade after another day of modest gains on Wall Street, with the S&P 500 benchmark also closing in on a record high.

    Shares in Asia-Pacific were mostly higher overnight, with markets in mainland China and Hong Kong leading gains and Australia’s S&P/ASX 200 hovering near a two-year high. Japan’s Nikkei 225 and Topix bucked the trend to post slight declines.

    Trading volumes are expected to be thin during the last two days of the trading year, with fewer data points on the economic calendar and all major central bank meetings out of the way.

    In terms of individual share price movement in Europe, Spanish utility company Endesa fell 3% in early trade to the bottom of the Stoxx 600, while Danish biotech Zealand Pharma gained 3% to lead the index.

    Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

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  • Your Weekend Playlist: New Music To Listen To This Friday

    Your Weekend Playlist: New Music To Listen To This Friday

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    It feels like it’s been forever since I’ve graced everyone with a new batch of fresh music…but like all inevitable things in life- love, loss, aging- I’m here again. Call me persistent, call me determined, call me relentless- I will not give up on finding new music worth listening to every single Friday.

    I am overtly excited to share all of these tracks, spanning all different genres to give you a little taste of everything…because what’s a good playlist if not all over the place? Riddled with exciting beats, refreshing sounds, and unique vocals, the first week of November is proving to be one of the best weeks we’ve had for music in a while.

    With your Spotify Wrapped being slowly curated, you can wait in anticipation by discovering all these new artists and songs! How convenient. You’re very welcome.

    We don’t have time to waste, so let’s get listening!

    Victoria Justice, Toby Gad- “Big Girls Don’t Cry” 

    Toby Gad is a collaborative genius- co-writing mega-hits like Beyonce’s “If I Were a Boy”, Demi Lovato’s “Skyscraper”, and John Legend’s “All Of Me”. He’s working on re-creating his extensive repertoire by recording piano versions…his latest installment being Fergie’s “Big Girls Don’t Cry”, accompanied by famed singer-actress Victoria Justice.

    Justice’s strong vocals and ability to belt make her the perfect touch to Gad’s already iconic writing. When re-imagining music, you want to make it uniquely your own. Which is why Justice and Gad put such a refreshing, soothing approach on the song that makes it unlike anything you’ve heard before.

    Conan Gray- “Killing Me” 

    Conan Gray’s gentle tone yearns to move on in “Killing Me”, his latest track about being unable to move on from those relationships that are toxic. The hold they have on you remains, but you can’t seem to find any more redeemable qualities that keep you around. Those relationships feel like they’re killing you, and Conan Gray has a special way of putting it into words.

    “I wrote “killing me” while I was sick with the flu. It was a miserable time where I was both physically sick, but also super heartbroken over somebody. Hence, ‘you’re KILLING me.’ I think we all have those people who don’t treat us nearly well enough, but we just can’t seem to let them go. People who call you at 2AM, and who you know you shouldn’t pick up……but you do. “Killing Me” is for when you’re on your last limb begging this person to just please stop torturing your heart.”

    ericdoa- “dancinwitsomebawdy”

    At age 21, you wouldn’t expect ericdoa to be as experienced and talented at creating a hit track…but he is, and that’s what makes him a juggernaut in the hyperpop, rap scene. He blends genres into one that just makes sense, which “dancingwithsomebawdy” is an example of. The track gets us ready for a new album in the new year, “dancingwithsomebawdy” is both a thrill to listen to and a promise of what’s to come.

    “I missed a lot of childhood being in meetings, obsessing over trying to be this artist that I wanted to become,” he says. “I really lost the freeing, adolescent feeling of just creating whatever I wanted.”

    ROSIE- “It’s Not Christmas” 

    The first holiday song on our Weekend Playlists! It was inevitable, but ROSIE’s is a beautiful encapsulation of what it’s like to miss someone during the holiday season. We know it as a time of celebration and to be around family, but don’t often consider what it may be like for those missing a person. A pleasant reminder to stay positive, ROSIE delivers a heart-warming holiday track.

    “It’s Not Christmas” is about missing someone during the holiday season. Although this time of year is full of joy and magic for some, it can be extremely difficult for others, so I wrote a song for anyone who needs a reminder that’s it’s okay to be sad, even on Christmas!”

    Dax ft. Darius Rucker- “To Be A Man” 


    Nigerian-Canadian country rapper Dax has a way of molding country music into its own, special sound. Pairing up with hit country singer, Darius Rucker, makes “To Be A Man” even better thanks to his smooth sound that can complement anyone’s vocals. The track instantly went viral on Instagram, which makes sense due to its empowering, uplifting lyrics that hit home with any listener.

    It’s an introspective, honest track that encourages you to look inside and acknowledge when you need help as well. It’s a look into mental health, the struggles we go through, and what it means to “be a man.”

    Zoe Ko- Baby Teeth 


    When you listen to Zoe Ko’s EP, Baby Teeth, you’ll get notes of pop-rock princesses like Gwen Stefani during her No Doubt days, Olivia Rodrigo, and maybe even a hint of Paramore in there. You’ll hear her cutting edge, witty lyrics and lilting voice that hits every note just right, and want even more from her.

    Baby Teeth consists of five tracks to give you the perfect sampling of who Zoe Ko is as an artist: honest, funny, and edgy. In the world of Zoe Ko, there is something satisfying about the guitar riffs and confidence that exudes from this EP. She’s one to watch in the industry for sure.

    Sammy Virji- “If U Need It” 


    Sammy Virji is on fire lately, “If U Need It” is the perfect track to go out and dance to. It’s got the makings of a staple on your going out playlist: a hook that makes you want to sing, a beat that makes you want to dance, and the innovativeness to sound fresh and new every time you hear it. “If U Need It” has it all.

    Known for his risk-taking with his music, Sammy Virji is proving that he’s a name to be remembered in electronic dance music. We can’t wait to see what comes next, knowing that he delivers time after time.

    Joy (Anonymous)- Cult Classics 

    Joy Anonymous is here with their vital collection of tracks essential for a night on the dance floor. With all tracks technically (and cleverly) titled “JOY”, you’re getting what is considered Joy Anonymous to their core. It’s a bold mix of disco, house, soul, and classic EDM that works perfectly.

    “Cult Classics is the soundtrack of Joy Anonymous meetings over the past two years. It began in Imogen Heap’s house in Romford. Where we spent two weeks working with various friends and new collaborators to form the skeletons of what was to become the album you hear today. Then we took these sounds on tour and tested them out in meetings around the world, honing and developing the sound on the move. Joy Anonymous is a movement where people feel included and feel safe to share expression and emotion. We have tried to capture that in the sound, process, and delivery of this album.”

    Take That- “This Life” 

    Gearing up to release their ninth studio album as a band, Take That shares the second single from their upcoming album, Brand New Sun. “This Life” is a showcasing of Take That- their vocals, their band, and their production skills all display their expertise in the industry. It’s polished, well-rounded, and a sign that Take That has it all figured out.

    “It’s been a wonderful experience being back in the studio together making this record.It has that feeling of spreading your wings, letting out the old and bringing in the new” commented the band. ‘We’re incredibly proud of the new album – there’s a sense oftogetherness, whether that’s us coming back together as a band or people wantingconnection in their own lives. We’re excited for this new chapter!”

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    Jai Phillips

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  • Adidas and Puma shares rally after Nike results

    Adidas and Puma shares rally after Nike results

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    Investors bid up Nike’s rivals Adidas and Puma in early European markets action, after their U.S. peer beat first-quarter earnings forecasts.

    Adidas shares
    ADS,
    +6.09%
    jumped 6%, and Puma stock
    PUM,
    +6.22%
    rose 5%, after Nike
    NKE,
    +0.23%
    reported better margins than forecast even though revenue met expectation.

    JD Sports Fashion
    JD,
    +5.04%
    shares also jumped 6% in London.

    Analysts at JPMorgan led by Olivia Townsend said the read-across to the European sporting goods sector was better-than-expected demand in North America, a solid performance in Europe, expansion in gross margins and ongoing improvements in inventory levels.

    The major European indexes also advanced on Friday, with the U.K. FTSE 100
    UK:UKX,
    German DAX
    DX:DAX
    and French CAC 40
    FR:PX1
    each sporting gains around 0.7%.

    U.S. stock futures
    ES00,
    +0.42%
    also edged higher ahead of the release of the PCE price index report later. The S&P 500
    SPX
    ended Thursday with a 0.6% rise.

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  • Here’s what Germany should be called instead of the ‘sick man of Europe,’ says Deutsche Bank

    Here’s what Germany should be called instead of the ‘sick man of Europe,’ says Deutsche Bank

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    The hurdles facing Germany’s economy in recent years have been plentiful, but the “sick man of Europe,” label is unfair, say Deutsche Bank strategists, who see promise for investors in the region’s biggest economy.

    Contrary to the rest of the eurozone, Germany has only managed to get back to its pre-COVID growth level, yet a title of “sore athlete” is more accurate, say Maximilian Uleer, head of European equity and cross asset strategy and Carolin Raab, European equity and cross asset strategists, in a note to clients that published Friday.

    “Germany has been facing multiple challenges, from rising energy costs, its high manufacturing exposure, to weak demand from its export destinations. Some of the challenges are ‘homemade’ and might persist, while others could start to unwind and soon turn into opportunities,” the pair said.

    Germany’s economy is the worst-performing of the developed world this year, with both the International Monetary Fund and European Union forecasting contractions in growth.

    Read: Germany’s economy struggles with an energy shock that’s exposing longtime flaws

    But the strategists say economic growth is a poor proxy for German equity performance. The German DAX index
    DX:DAX
    is up 18% since the end of 2019. DAX constituents generate just 18% of their revenues domestically, compared to 22% from the U.S. and 15% from China.

    Across the broader HDAX index of 100 members, manufacturing, information technology and financial services are the main contributors to equity performance. That’s as public services, trade, business services and real estate, all of which contributed significantly to GDP over the past four years, are underrepresented in the indexes.

    Germany has also managed to grow its real GDP by 26% over the past 20 years , and keep its debt-to-GDP ratio stable, while the eurozone (including Germany) has seen that debt ratio climb 30% since 2003. The short term has seen lower growth since COVID-19, and rising leverage owing to fiscal support measures to mitigate the pandemic and the war in Ukraine.

    Again, the strategists see a silver lining. “Going forward, in our view, Germany has bigger leeway with regards to its fiscal support capacity, as its absolute debt/GDP ratio remains one of the lowest among the eurozone members,” said Uleer and Raab.


    *Since 2003: Q3 2003-Q2 2023 / since Covid: Q4 2019-Q2 2023. Source: Bloomberg Finance LP, Deutsche Bank Research 09/20/2023

    Among the country’s big hurdles is rising energy costs, with the pair noting that the country’s net-zero goals are laudable, but pose a “substantial challenge” to its energy-intensive industries. Power prices remain substantially higher than three years ago and are double the cost of those in the U.S.

    Also read: Inside Germany’s industrial-sized effort to wean itself off Putin and Russian natural gas

    “This price differential, combined with stronger fiscal support for energy-intensive companies in the U.S. via the Inflation Reduction Act, weigh on the competitiveness of German corporates,” said the strategists.

    As for opportunities, China’s reopening remains a positive for DAX companies, though that country also seems to be making slow progress. Chinese households are sitting on massive savings still waiting to be spent, said the strategists. They advise investors to wait for data that confirms a stabilization of the country’s bumpy property market before they would turn more positive.

    Overall, Deutsche Bank expects inflation to normalize in the coming 12 months and low growth in 2024, but a rebound in 2025.

    Plus: A 1-liter stein of beer at Munich’s famed Oktoberfest will cost nearly $15 this year

    And what’s priced into the DAX already? Even after a gain of 12% this year so far — French
    FR:PX1
    and Greek stocks
    GR:GD
    — are beating Germany by a respective 20% and 30% — the index is still cheap and trading at a 20% discount to its 10-year average on a forward one-year price/earnings basis. Germany can count on stronger U.S. data, even if Europe continues on a weak path.

    “We expect the DAX to hold up in 2024, and do not forecast the index to underperform, despite lower German GDP growth as compared with the rest of the eurozone,” they said.

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  • Recession-hit Germany is facing a flurry of global headwinds, Goldman Sachs says

    Recession-hit Germany is facing a flurry of global headwinds, Goldman Sachs says

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    The victory column and TV tower are pictured in front of the sunrise in Berlin, Germany.

    Florian Gaertner | Photothek | Getty Images

    Germany finds itself at a crossroads of global issues as it deals with an economic contraction, according to Peter Oppenheimer, chief global equity strategist and head of macro research EMEA at Goldman Sachs.

    “The predicament that the economy is facing at the moment is really down to a number of factors,” Oppenheimer told CNBC Tuesday, with challenges in the manufacturing sector, a disappointing China reopening boost and higher energy costs contributing to the recession in Europe’s largest economy.

    “It’s … not a deep recession but it’s obviously been more hit by obvious headwinds,” Oppenheimer said.

    The comments reflect the latest projection by the Bundesbank, which estimated Monday that the German economy is likely to shrink this quarter thanks to slow private consumption and industry stuttering.

    Germany officially fell into a technical recession in the first quarter of the year as GDP growth was revised from zero to -0.3%. 

    Bleak forecasts for the German economy have prompted discussion as to whether the country is once again the “sick man of Europe,” a moniker that was first used to describe Germany in 1998 as the country navigated the costly challenges of a post-reunification economy.

    But there are positives to be found in the German economy, Oppenheimer told CNBC. 

    “The equity market has been holding up quite well and there are some bright spots, I think, in terms of activity in the economy,” he said, highlighting “opportunities” in Germany’s small and mid-sized companies, known as the Mittelstand.

    Germany is the sick man of Europe, Ifo institute says

    Germany’s DAX index will see “fat and flat” returns going forward, Goldman Sachs predicted, in line with the rest of Europe.

    “Over the short term, we could see a rebound in the DAX along with a broader range of China-related assets,” the bank said in a research note, but there is a risk that Chinese trade doesn’t provide as much of an economic boost as expected.

    “Going forward, any rise in geopolitical tensions or curtailment in world trade would hinder the German recovery,” the note said.

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  • European stocks break two-day declining streak

    European stocks break two-day declining streak

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    European stocks finished higher Friday, with the Stoxx Europe 600 index STOXX Europe 600 Index rising 0.34% to 469.00.

    The German DAX DAX increased 0.54% to 15,881.66, the French CAC 40 index CAC 40 Index increased 0.51% to 7,577.00 and the FTSE 100 index FTSE 100 Index increased 0.15% to 7,914.13.

    Among Stoxx Europe 600 constituents, health…

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  • European stocks set to log worst year since 2018 as rate hikes, Ukraine war rattle markets

    European stocks set to log worst year since 2018 as rate hikes, Ukraine war rattle markets

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    A stock trader looks at his monitors at the stock exchange in Frankfurt, Germany.

    Kai Pfaffenbach | Reuters

    LONDON — European markets are on course for their worst year since 2018 as Russia’s war in Ukraine, high inflation and tightening monetary policy hammered risk assets around the world.

    The pan-European Stoxx 600 index started the last trading day of 2022 down more than 12% since the turn of the year, its worst performance since a 13.24% annual decline in 2018. The European blue chip index enjoyed a bumper 2021, jumping 22.25% on the year.

    Morning trade on Friday saw the U.K.’s FTSE 100 slide 0.3%, the CAC 40 down 0.6% and the German DAX lower by 0.5%. The Stoxx 600 was down 0.4%.

    Economies around the world began the year still trying to emerge from the Covid-19 pandemic, with persistent lockdowns in China and other lingering supply bottlenecks forming what was now infamously mischaracterized by the U.S. Federal Reserve in 2021 as “transitory” inflationary pressure.

    Russia’s unprovoked invasion of Ukraine in February, and subsequent weaponization of its food and energy exports in the face of sweeping sanctions by Western powers, sent food and energy prices skyrocketing and compounded this pressure, helping to send inflation to multi-decade highs across many major economies.

    The cost-of-living crisis arising from soaring energy bills for businesses and consumers eventually began to weigh on activity, while the Fed and other major central banks were forced to tighten monetary policy with aggressive hikes to interest rates in order to rein in inflation.

    However, these efforts to suppress demand weighed heavily on already faltering economies. The U.K. is projected to already be in what will be its longest recession on record, while a downturn in the euro zone is also seen as highly likely.

    With the war in Ukraine showing no sign of abating and China in the process of reopening its economy as it ends three years of stringent Covid measures, investors are looking ahead with some trepidation to 2023.

    “What happened this year was driven by the Fed. Quantitative tightening, higher interest rates, they were pushed by inflation, and anything that was liquidity driven sold off — if you were equities and bond investors, came into the year getting less than a percent on a ten-year treasury which makes no sense,” Patrick Armstrong, chief investment officer at Plurimi Wealth LLP, told CNBC’s “Squawk Box Europe” on Friday.

    “Next year I think it’s not going to be the Fed determining the market, I think it’s going to be companies, fundamentals, companies that can grow earnings, defend their margins, probably move higher,” he said.

    Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

    —CNBC’s Natasha Turak contributed to this article.

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