Market report: DAX expected to be slightly higher

If trading is expected to be quiet, the DAX should start a little higher. Good guidelines come from Japan, where the weak local currency, the yen, supports the export industry.

After the Christmas break, the DAX is likely to start trading with moderate profits on low sales. In initial indications, the leading German index is rising slightly towards 19,900 points. On Monday, the DAX ended trading slightly weaker at 19,848 points.

After a record of over 20,500 points in mid-December, the index recently went into a correction; Profit-taking dominated the picture at the end of a strong year.

The appointment calendar is clear. No notable news from the corporate sector or new economic data is expected. In the USA, where trading took place yesterday, hardly any new data is expected in the afternoon.

The plastics company Covestro, which is about to be taken over, is being removed from the German stock index DAX today. The reason for the unscheduled change in the composition of the index was Covestro’s insufficient free float of less than 10 percent, the Deutsche Börse index subsidiary Stoxx said on December 19th after the stock market closed in Zug, Switzerland.

The state oil company XRG (formerly Adnoc) from the United Arab Emirates announced on December 19th that it had acquired over 91 percent of the shares in the takeover offer. Covestro will be replaced by the dialysis specialist FMC (Fresenius Medical Care).

According to the information, the housing group Deutsche Wohnen, which belongs to Vonovia, will move up from the SDAX in the MDAX, from which FMC is moving up. And the laser specialist LPKF will subsequently be included in the SDAX.

The prospect of possible interest rate hikes by the Bank of Japan (BoJ) and a weak yen are buoying the markets in Japan. In Tokyo, the Nikkei index, which includes 225 values, recently rose by around 2.0 percent to almost 40,400 points, surpassing the 40,000 point mark for the first time since mid-December. The broader Topix was recently 1.3 percent higher.

The BoJ could turn the interest rate screw as early as January. Some monetary authorities already see the conditions for an imminent increase, as can be seen from minutes of the most recent meeting in December.

In Japan, export-oriented companies such as VW’s arch-rivals Toyota and Sony benefited from the weak yen. Things are also looking up in the other Asian markets, even if ongoing concerns about the country’s economic recovery are weighing on profits in China.

In Asian currency trading, the dollar lost slightly by 0.2 percent to 157.61 yen. The Japanese currency is still trading near its five-month low. Investors fear that the central bank in Tokyo could intervene again in the foreign exchange market if the exchange rate rises to 160 points. The euro is currently trading slightly weaker against the dollar at $1.0409.

Unlike here, trading took place on Wall Street yesterday. With thin sales there was hardly any movement. However, rising bond yields unsettled the few market participants.

The Dow Jones index of standard stocks closed 0.1 percent higher at 43,325 points on Thursday. The broader S&P 500 fell 0.1 percent to 6,037 points and the Nasdaq Composite also lost 0.1 percent to 20,020 points.

US Treasury yields rose across the board. The shares with a 10-year term recently climbed to 4.57 percent, their highest level since the beginning of May. We are now at a turning point, said George Cipolloni, portfolio manager at Penn Mutual Asset Management. “Any increase tends to lead to weakness in the stock market.”

What has to do with the election of Donald Trump as president. The subsequent rally on the stock market has recently stalled because the US Federal Reserve will probably not cut interest rates as significantly next year as initially expected. Market participants fear that Trump’s announced economic agenda, particularly with high tariffs, could increase inflation.

Food delivery service Delivery Hero has suffered a setback in Taiwan. The local competition authority TFTC will not approve the sale of the Food Panda business in Taiwan, which was announced in May, the company announced over the Christmas holidays. The US driving and delivery service Uber wanted to acquire the area in a multi-stage deal for almost one billion US dollars

The Americans also planned to buy a small stake in Delivery Hero. Uber could appeal the TFTC’s decision or terminate the transaction, the statement added. Their shares were relatively unimpressed by the news on Friday.

The US bank JPMorgan has left the rating for Delivery Hero at “Overweight” with a price target of 49 euros on the occasion of the sale of the Food Panda business prohibited by the Taiwanese competition authority.

The announcement was a clear negative point for the food supplier because most investors were convinced that the deal would go through, wrote analyst Marcus Diebel in a study available on Friday. Although he still sees room for other sales in the region that could act as positive price drivers, the share price is likely to be significantly impacted in the coming days.