Wall Street party continues

While investors on Wall Street are looking forward to the forthcoming rate cut and are driving the indices to ever new heights, Frankfurt and other European exchanges are dominated by tristesse.

The German Dax hardly moved a bit this Friday. The benchmark index fluctuated between 12,304 and 12,354 points. At the end of the trading day, the index had dropped to 12,323 points, 8.8 points or 0.07 per cent weaker than the previous day.

Market experts speak of an “obvious weakness” in the face of record levels on Wall Street. The German benchmark index is being weighed down by concerns about a massive decline in domestic corporate profits. The profit warnings of German companies, from the machine manufacturer Aumann to Lufthansa and Daimler, do not stop.

Only the hope for a loose monetary policy is likely to carry the stock markets a little further, writes analyst Christian Kahler of DZ Bank. At the same time, the valuation comes up against “historical upper limits”. It is also above average in Germany and Europe. So if the Fed disappoints the market in the short term and the trade dispute between China and the USA continues, there is likely to be a sharp correction in the markets – especially on Wall Street.

Dow and Nasdaq continue to climb

Until then, prices in New York will continue to rise. After having passed the 27,000 point mark for the first time the day before, the Dow Jones index rose by half a per cent to over 27,200 points by the close of trading in Frankfurt, thus marking a new high. The technology-oriented index continued to approach the 8,000-point mark.

At midweek, US Federal Reserve Chairman Jerome Powell had pointed out the increasing global conflicts, which are weighing heavily on the economy and politics. Investors expect the Fed to take countermeasures this month with a rate cut to boost investment.

At the same time, the American-Chinese customs dispute entered a new round. Donald Trump had recently followed up and complained on Thursday via Twitter that China had not yet bought agricultural products from the USA on a large scale as promised. He is also still in a clinch with the EU because of customs issues. And there is no easing in sight in the conflict between the USA and Iran either.

Euro remains in position

On Friday, the euro relinquished interim profits. At the close of trading, the European single currency costs 1.1256 dollars. It was slightly lower than in the morning, after having risen to 1.1275 dollars in the meantime. The European Central Bank (ECB) set the reference price in the afternoon at 1.1253 (Thursday: 1.1285) US dollars. Better-than-expected data from the German industry supported the euro only briefly. Industrial companies in the eurozone had produced 0.9 per cent more in May than in the previous month. Analysts had only expected growth of 0.2 per cent. The industry has recently been hit particularly hard by the trade conflicts.

Oil under political tension

There is also little movement on the commodities market. Tensions in the Strait of Hormuz keep quotations for oil at the upper end of last week’s price range. Brent, North Sea oil, cost 66.73 dollars, slightly more than the previous day. The price for the troy ounce of gold has again established itself above the 1,400 dollar mark, currently at 1,407 dollars.

Daimler only moderately burdened

In the Dax, the Daimler share lost more than three per cent in early trading but was able to significantly limit its losses in the further course of the year. The papers of Fresenius, Wirecard and Vonovia also suffered noticeable losses. Also, Covestro, Conti and Deutsche Bank made gains.

T-Mobile and Sprint take their time

According to a press report, the US telecom subsidiary T-Mobile US and Sprint, which are willing to merge, want to take more time to conclude the deal. The companies plan to extend the merger agreement beyond July 29, reported the Wall Street Journal (“WSJ”) on Thursday, citing an insider. More than a year ago, T-Mobile US and Sprint announced their intention to merge. T-Mobile shares lost up to a good two per cent, Sprint more than three per cent.

The US satellite TV provider Dish, with whom talks are currently underway, is considered to be the key player on the scales. According to reports, the US Department of Justice wants to ensure price competition in the event of a merger by selling the Sprint prepaid subsidiary Boost an Dish, among other things.

VW and Ford forge electric car giant

Volkswagen and Ford want to enter the electric age with an extended alliance and thus put the competition under pressure. The world’s largest carmaker from Wolfsburg, Germany, and the number two in the USA presented their plans for global cooperation on electric cars and self-propelled vehicles in New York on Friday. They want to share the costs for new developments and exploit synergies. The Wolfsburg-based company supplies its partner from Dearborn with electric car components from its modular system on a large scale and also participates in its subsidiary Argo AI for self-propelled cars. The agreed supply of parts for electric cars alone has a volume of up to 20 billion dollars as a first step.

Chinese want to save Thomas Cook

The British package tour operator Thomas Cook is to be protected from extinction by the Chinese Club Med owner Fosun. The Fosun Tourism Group and the creditor banks want to provide 750 million pounds (the equivalent of 830 million euros) of fresh money so that the 178-year-old traditional group can survive the 2019/20 winter season, as Thomas Cook announced on Friday. Discussions on this were well advanced. At the same time, the company is to be drastically relieved of its debts. The remaining shareholders will, however, be largely ousted as a result. The Thomas Cook share plummeted 47 per cent to an all-time low of seven pence on the London Stock Exchange.

Atlantia flirting with Alitalia

The Italian infrastructure group Atlantia is considering an entry into the troubled airline Alitalia. However, it is unlikely that such an examination would be completed by the deadline set by the government, the company submits. Italy’s Deputy Prime Minister Matteo Salvini had recently expressed optimism that Alitalia could be saved. This is the fourth time that the deadline for a possible offer by investors to Alitalia has been extended. Now it ends in mid-July. Rome has taken up the cause of saving Alitalia with around 11,600 employees. The state railway company was also considered a possible investor.

Trump wants to regulate cryptocurrencies

US President Donald Trump has spoken out in favour of putting digital currencies such as Facebooks Libra under bank regulation. If Facebook and other companies wanted to become a bank, they would need a concession and be subject to the same regulation as any other national or international bank, wrote Trump on Thursday (local time) on Twitter. He was also critical of other digital financial investments: “I’m not a fan of Bitcoin and other cryptocurrencies“. They are not money, and unregulated cryptographic facilities could encourage illegal activities such as drug trafficking. The only true US currency, says Trump, is the dollar.

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