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Dax: the Fed rate cut fizzles out
The Fed's surprising rate cut is likely to be counterproductive: a market observer even suspects that the central bank is currently experiencing a stressful situation. The Dax falls below the 9,000 point mark.
The Dax lost more than eight percent and fell to around 8,460 points. It was last at such a low level in February 2016. The US Federal Reserve surprisingly cut interest rates yesterday . "The US Federal Reserve did not help calm things down," commented VP Bank Chief Economist Thomas Gitzel. Taking just such a clear step just a few days before the regular interest rate decision suggests stress. "Investors no longer see the central bank's measures as an anchor of stability, but as panic reactions that underline the seriousness of the situation," said the experts at ING. This week, the risks of further losses remain extremely high .
After the longest bull market in US history ended, Goldman Sachs market experts in the S&P 500 believed that another 25 percent slide to 2,000 points was possible. On Friday it closed at 2,711 points. In mid-February he had reached a record high of 3,393 points. By the end of the year, Goldman Sachs experts around David Kostin remain optimistic and expect a further increase to 3,200 points. They are betting that event-driven slumps - like the current coronavirus crisis - have been followed by massive recoveries in the past.
The Japanese central bank also eased its monetary policy further. Among other things, it boosts the purchases of listed funds, so-called ETFs, and other risky investments. The central bank maintained the short and long-term interest rate targets. The BOJ will continue to loosen its monetary policy without hesitation, should this be necessary, she said after the crisis meeting.
The exchanges in Asia were already diving. The Japanese Nikkei fell 2.5 percent. The Shanghai stock exchange slipped 3.3 percent. The Australian stock market even slumped by almost ten percent and recorded the largest daily loss since 1987.
It is not just downhill on the stock market. The price of oil is also not coming to a halt, although US President Donald Trump had announced measures to support oil prices. According to recent reports, the US is currently preparing to buy 77 million barrels of crude oil on the market in the next two weeks to top up the country's emergency reserve. Meanwhile, the euro has given up its gains again after the Fed's move.
Lufthansa shares drop by almost 14 percent. The airline had announced at the weekend that the dividend would be cut . The company has also secured new loans of EUR 600 million. This means that the group has cash and cash equivalents of around 4.3 billion euros, it said. Europe's largest airline is also exploring the chances of government aid because of the impact of the pandemic .
"Lufthansa is in a much better position in the crisis than other airlines," said a market observer, also referring to the high proportion of aircraft owned by the group. "In the normal market environment, this would calm down significantly, but currently not."
After the proclamation of a state of emergency in Slovakia due to the Corona crisis, Volkswagen will probably temporarily stop production at its plant in the capital city of Bratislava. The car maker is preparing the move on Monday, the head of the Slovak company said.
The Prime Minister of Slovakia, Peter Pellegrini, had already indicated a corresponding step. The politician justified this in front of journalists on Sunday in Bratislava with the increasing number of infections with the novel corona virus in the country. There have been 61 confirmed cases in Slovakia so far.
The steel group Salzgitter suffered a high loss last year due to high depreciation and restructuring costs. The bottom line was a shortfall of 237.3 million euros. A year earlier, there had been a profit of almost 278 million euros. Adjusted for special factors, earnings before taxes were EUR 143 million. Sales fell from just under 9.28 to 8.55 billion euros. Shareholders should receive a dividend of EUR 0.20, significantly less than the EUR 0.55 per share in the previous year.
Salzgitter sees stabilization trends on the European steel market in the current year. For this reason, it is assumed that sales will increase to nine billion euros. Earnings before taxes should be roughly balanced. The group thus remains with its last forecast. However, the new type of corona virus added another uncertainty factor, the effects of which Salzgitter cannot currently reliably estimate.
The luxury company LVMH wants to produce large quantities of disinfectants in its perfume and cosmetic factories in France because of the coronavirus crisis. From Monday, factories that actually produce perfume for Christian Dior or Givenchy are to produce the appropriate gel to counteract the lack of disinfectants, as the French company announced on Sunday. The hand disinfectants are then to be delivered free of charge to health facilities in France.
LVMH Moët Hennessy Louis Vuitton is the world's leading luxury goods company. The group includes, among others, champagne houses like Veuve Clicquot Ponsardin and Krug as well as fashion houses like Kenzo and Fendi. LVMH chief Bernard Arnault is the fourth richest man in the world with $ 69.2 billion in assets, according to the Bloomberg Billionaires list.
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The Italian sports car manufacturer Ferrari closes its two plants for two weeks because of the corona virus outbreak. The company had initially tried to keep the factories running, but now "the first serious problems in the supply chain" prevented further production, Ferrari said in a statement on Saturday.
The plants in Maranello and Modena would therefore remain closed until March 27th. Scuderia Ferrari, responsible for Formula 1, has also ceased operations. The decision was made "out of respect" and for the "peace of mind" of Ferrari workers and suppliers, said CEO Louis Camilleri.
The Dutch airline KLM is cutting up to 2,000 jobs due to the effects of the Corona crisis on international air traffic. Numerous flights had to be canceled and short-time work was essential, the company said on Friday evening. For reasons, KLM referred, among other things, to the US's entry ban for Europeans.
Rising rents have given the residential property group Grand City Properties further impetus in 2019. The MDax company plans to continue growing in the current year. In 2019, rental and operating income increased by three percent compared to the previous year to 560.3 million euros.
The operating result FFO 1 ("Funds from Operations") rose by seven percent to almost 212 million euros. The dividend is to be increased by seven percent to EUR 0.8238 per share. The bottom line was a profit of 493 million euros in the reporting period, 15 percent less than a year ago. This was mainly due to the moderate increase in real estate valuation.
The tourism group Tui stops most of its business because of the corona virus and applies for bridging state aid. All package tours and cruises do not take place for the time being due to the requirements of many governments to contain the virus, hotels are being closed. "We are taking drastic cost measures to mitigate the impact on our bottom line," said Tui. But that is apparently not enough: To cushion the loss of sales that results from this, Tui will apply for government aid. It was about state guarantees until normal business operations could be resumed, the company said.
