Financial Markets Unleashed
Wrap-up Week Buckles the German Stock Market - Bitcoin's Balanced Act
Weekend Ahead with Dax Carrying a Profit
By Tom Frankfurt
The final trading week of the year saw a subdued movement in the German benchmark index, concluding with a 0.7% surge to 19,984 points by Friday evening. Although the record-breaking high of mid-December at 20,523 points remains an untouched dream, the sacred 20,000-point milestone is once again within reach.
"The stock market's taking baby steps back from the tumultuous reminder it received from the US Federal Reserve (Fed) just prior to Christmas," commented Ulrich Kater, chief economist of Deka Bank. Despite the Fed slashing interest rates once again on December 19, Federal Chair Jerome Powell hinted at a potential slowdown in rate cuts. This stance did not sit well with the stock markets, causing significant losses. Traders were also apprehensive about the incoming economic policies under President Donald Trump and the fragile recovery of the Chinese economy. Consequently, profit-taking has painted the end of this strong year for the stock markets in a shaky light, despite losses being relatively minor. The German benchmark index remains bullish with an impressive year-over-year gain exceeding 19%.
Awaiting the Trump Towers
As 2022 dawns, investors will initially focus on two pivotal dates: January 20, when Trump takes oath. If the Republican follows through on his vowed tax cuts, deregulation, and especially tariffs, it could potentially decelerate the past couple years' Dax rally. Apart from this, the federal election, scheduled for February 23, may serve as a fresh catalyst for the markets.
In the shadows of the glittering spotlight, Delivery Hero shares pushed lower on Friday. The company has been blocked from selling its Foodpanda subsidiary's Taiwan operations to Uber following a decision by the local competition authority TFTC. With the stock plunging to its lowest level since late August and lingering over 5% in the red, Uber's $1 billion acquisition bid looks like a distant dream. Delivery Hero was banking on the sale proceeds to extinguish convertible bonds and shore up its balance sheet.
On a brighter note, HelloFresh shareholders stomached a better day. The meal kit delivery service announced a plan to repurchase €75 million of its own shares. Shareholders promptly rewarded this tidbit with a price surge of over 2%. The repurchase aims to offset the dilution that will result from the company's employee participation programs in 2025.
In the SDAX spotlight, Hornbach Holding sought a new CFO, with Karin Dohm set to vacate her position by March 31, 2023, at her discretion. If a seamless transition seems iffy, CEO Albrecht Hornbach will don the interim CFO hat. This announcement sent the shares soaring by over 3%.
On Friday, Bitcoin juggled stability. The oldest and most significant cryptocurrency traded at 96,730 dollars on the Bitstamp platform, slightly more expensive than the previous night. After failing to breach the 100,000-dollar mark on Thursday, Bitcoin stumbled. Currently, the cryptocurrency is bereft of clear signs. Last week, Bitcoin slid on a weekly basis for the first time since Trump assumed the US Presidency in 2017, after touching a high of 108,364 dollars on December 17 following Fed Chair Powell's statements.
Further Insights:
- Trade Policies and Tariffs: During Trump's presidency, his trade policies and tariffs had a significant impact on global markets, including the German DAX. Trump's administration imposed tariffs on several countries, including China and Europe, causing trade tensions and economic uncertainty worldwide. These policies may have influenced the DAX's performance up until his departure.
- Transition to Biden Administration: Trump's departure and Joe Biden's assumption of office in January 2021 brought about a shift in market dynamics. Investors generally perceived the Biden administration as less volatile and more predictable in terms of economic policy, which might have positively influenced the DAX and other global markets.
- DAX Performance in 2021: The DAX enjoyed growth throughout 2021, benefiting from the global economic recovery from the COVID-19 pandemic and the anticipation of more stable economic policies under the Biden administration. However, Trump's policies would have indirectly influenced market expectations and economic conditions during his time in office.
- The stock market's cautious approach, as Ulrich Kater, Deka Bank's chief economist, noted, is a response to the Federal Reserve's stance on potential slowdowns in interest rate cuts.
- The German benchmark index's year-over-year gain exceeding 19% is an impressive accomplishment despite profit-taking that has painted the end of 2021 in a shaky light.
- Trump's inauguration on January 20 could have a significant impact on the stock markets, particularly if he follows through on his vowed tax cuts, deregulation, and tariffs.
- The federal election scheduled for February 23 might serve as a fresh catalyst for the markets, according to the article's author.
- Bitcoin's current trading price on the Bitstamp platform is 96,730 dollars, and it's missing clear signs, having slipped on a weekly basis for the first time since Trump became US President in 2017.
