After the key interest rate hike in the USA and before the interest rate decision for Europe, the stock market tends to be weaker. The German leading index Dax lost 0.87 percent to 14,334.72 points at the end of the first hour of trading. The MDax lost 0.92 percent to 25,637.55 points.
As expected, the US Federal Reserve had raised interest rates by 0.50 percentage points the night before. However, investors are critical of the currency watchdog’s projections, which point to further interest rate hikes. In addition, the markets have been prepared for the fact that interest rate cuts are not yet to be expected in 2023. The background is the still very high inflation, which the European Central Bank (ECB) also has to deal with.
ECB interest rate decision
That is why the interest rate decision by the ECB is now the main focus today, supplemented by those in Switzerland, Great Britain and Norway. The Swiss National Bank increased its key interest rate by 0.5 points to 1.0 percent.
Positive price developments were rare in the three major indices of the Dax family. In the leading index, Deutsche Telekom, which investors value as a defensive investment, was a small winner with an increase of 0.2 percent.
Meanwhile, the losers’ lists included stocks for which rising interest rates are seen as a problem. These include certain stocks from the technology sector, above all German online stocks.
Delivery Hero, for example, lost 3.5 percent in value in the MDax. From the SDax, the Auto1 titles fell even more sharply by 8.3 percent. Bank of America dropped its previous buy recommendation for the online car dealership.
Ceconomy brings up the rear in the SDax
However, Ceconomy brought up the rear in the SDax with a price slide of 10.5 percent. The electronics retailer is aiming for a slight increase in sales and a significant improvement in earnings in the new financial year, but investors obviously do not believe it. The company itself expressed the proviso that the economic situation does not deteriorate further and that the electronics market only shrinks moderately.
There were also statements about the future from the former Ceconomy mother Metro. Here, the price fell, similar to the market, by a little more than one percent, although the retail group wants to return to profitability in the new financial year and has increased its medium-term sales forecast.
Munich Re shares fared better than the market, almost at the level of the previous day. As the world’s largest reinsurer surprisingly announced on Wednesday evening, it is aiming for a consolidated profit of around four billion euros for the coming year. Investors found it difficult to classify this because the key figure is based on a new accounting standard and is therefore not comparable with previous year’s figures.
