Stock Market Mood: Festive Yet Cautious
Trump advocates for a designation (or title) in the administration
The stock markets are decked out in a relaxed atmosphere, mirroring the pre-Christmas vibe. Significant price swings are a rarity now. The German stock index settled nearly unchanged at 19,849 points (-0.2%), a relief after the apprehensive predictions from the Federal Reserve on interest rates in the pre-Christmas week. Despite the current standoff, the illustrious figure of 20,000 points remains a distant dream for the Dax for the time being. It's worth noting that the stock market barometer has almost relinquished all the gains from the previous year-end rally. However, the total gain for 2023 remains an impressive 18% from the year's start.
Individual stocks saw mixed reactions. Shares of Volkswagen took a hit in the Dax following the resolution of the wage dispute. Initially, the shares rose, but then took a turn for the worse, ending the day with a loss of over 2%. The company plans to reduce more than 35,000 jobs by 2030, aiming to save 1.5 billion euros per year. In return, the company has pledged a new job security guarantee till 2030, ruling out any immediate closure of entire plants. Nevertheless, the agreement failed to meet the initial expectations of management and investors, as per Philippe Houchois, an analyst at US investment bank Jefferies. Given the intensity of competition and the challenging environment in the automotive sector, "there is a risk that profits will come too late or not be sufficient," asserted the experts at private bank Oddo BHF.
The shares of defense company Rheinmetall were in demand on Monday, as the imminent presidency of Donald Trump raised concerns regarding the relatively low defense spending of European alliance countries like Germany. NATO Secretary-General Mark Rutte anticipates renewed pressure from the US administration in the debate over defense spending. This prospect makes Rheinmetall one of the biggest winners in the Dax. In the MDax, defense company Hensoldt also saw gains.
Borussia Dortmund shares reaped benefits from their impressive away win in the last Bundesliga game of the year in Wolfsburg. The BVB is now within touching distance of the Champions League spots, which promise substantial revenue, with 25 points and 6th place in the table.
In Copenhagen, shares of pharmaceutical giant Novo Nordisk experienced a resurgence, gaining up to 9% at times. The shares had plummeted by over 20% on Friday after Denmark announced a setback in the development of the next generation of its weight loss injection, CagriSema. The drug led to a weight loss of 22.7% in obese patients in a crucial Phase 3 clinical trial, although Novo Nordisk had expected up to 25% weight loss.
Seasonal trends and economic factors often play a role in the performance of stock markets around holiday periods. Historically, stock markets might experience lighter trading volumes and potential slight increases in value due to the "Santa Claus Rally". Additionally, the overall economic condition, including inflation rates, interest rates, and consumer confidence, as well as investors' year-end review and expectations for the upcoming year, can impact stock prices. Political and geopolitical events, economic news from major countries, and unexpected announcements can also cause volatility in the market.
For more precise data on how the DAX has performed on the last trading day before Christmas in recent years, historical financial databases or news archives would be necessary, as such information isn't readily available in the search results.
- Despite Volkswagen's job-cutting plan and the wage dispute resolution, shares of the company saw a decline of over 2% in the Dax, causing concern among analysts like Philippe Houchois at Jefferies.
- The shares of defense company Rheinmetall saw an increase in demand due to concerns over low defense spending in European alliance countries, with the imminent presidency of Donald Trump potentially escalating pressure on defense spending.
- Shares of Borussia Dortmund saw a boost following their impressive away win in the last Bundesliga game of the year, moving them closer to the Champions League spots and the associated revenue.
- Shares of pharmaceutical giant Novo Nordisk rebounded after a setback in the development of the next generation of its weight loss injection, CagriSema, falling by over 20% on Friday, while showing signs of recovery on Monday.
