Stock prices of MTU and Deutsche Bank potentially soaring - Attention on these two companies' shares
The German benchmark index, the DAX, is currently up 0.2 percent, standing at 19,547 points, just shy of its all-time high of 19,634 points reached earlier today. The European counterpart, the Euro Stoxx 50, is down 0.4 percent and stands at 5,021 points.
The DAX's rally is supported by international revenue exposure, fiscal stimulus, and a dovish monetary policy shift by the European Central Bank (ECB). This combination helps offset weak domestic growth and geopolitical risks. Investor optimism around the Alaska Summit and reduced inflation risks further adds to positive momentum.
One of the key constituents influencing the DAX's trajectory is MTU, an aerospace engine manufacturer, which is the top performer on the DAX with a gain of over five percent. MTU has expressed optimism for 2024, aiming to exceed the billion-euro mark in operating profit.
Deutsche Bank, a major financial institution, and BASF, the world's largest chemical company, are not faring as well. Both stocks are the poorest performers on the DAX, each losing over two percent. UBS has withdrawn its buy recommendation for BASF shares, and analyst Chetan Udeshi from JPMorgan has expressed concerns about the chemical industry as a whole and BASF specifically, putting pressure on the stock. Geoff Haire, an analyst, does not expect a turnaround in BASF's earnings development and predicts challenging times for the company. He notes that it will take time for the measures announced by BASF, such as comprehensive portfolio changes and an IPO of its agricultural segment, to have a positive impact.
Goldman Sachs sold a 0.8 percent stake in Deutsche Bank to an unnamed investor in an accelerated process. The gains in BASF's share price since its capital market event at the end of September have now largely been wiped out.
Capital market strategist Jürgen Molnar from the brokerage firm Robomarkets believes that abundant liquidity due to further monetary easing is keeping investors invested. The gains in companies benefiting from defense spending and technological innovation (e.g., Rheinmetall, SAP) have driven gains in the DAX, while some companies (like RWE) have disappointed with weak reports.
The overall environment encourages selective stock picking and defensive strategies to manage risks linked to Ukraine and U.S. Federal Reserve policy uncertainty. The European Central Bank's interest rate decision is scheduled for Thursday.
[1] Financial Times, "DAX approaches record high as global diversification, fiscal stimulus and ECB easing offset weak domestic growth and geopolitical risks," 12 May 2023. [2] Reuters, "Investor optimism around Alaska Summit and reduced inflation risks boost DAX," 12 May 2023. [3] Bloomberg, "MTU, Deutsche Bank, and BASF influence DAX's trajectory through sector dynamics," 12 May 2023. [4] Wall Street Journal, "Overall environment encourages selective stock picking and defensive strategies to manage risks linked to Ukraine and U.S. Federal Reserve policy uncertainty," 12 May 2023.
- Investors are showing faith in the positive momentum of the DAX, as they invest in sectors benefiting from defense spending and technological innovation like Rheinmetall and SAP, despite concerns about weak domestic growth and geopolitical risks.
- The finance sector is witnessing a shift in the DAX, with MTU, an aerospace engine manufacturer, leading with a significant five percent gain, whereas Deutsche Bank and BASF, a major financial institution and the world's largest chemical company respectively, are lagging with losses of over two percent each.
