Frankfurt's stock exchange - Dax experiences a minor setback.
The US labor market outperformed expectations in May, with a significant increase in job creation and a sharp acceleration in wage growth, despite a surprising rise in unemployment by 0.1 percentage point to 4.0%.
Analyst Thomas Altmann at QC Partners observed that the strong labor market and fast-paced wage growth may make the Federal Reserve hesitant to lower interest rates. If this trend continues, investors may have to wait until December for the first US interest rate hike, instead of the earlier anticipated reduction in September.
On the other hand, the European Central Bank (ECB) had already cut interest rates the day before, as expected by the market. Jürgen Molnar from broker RoboMarkets noted that since the surprise factor was low, the rate cut by the Federal Reserve was shrugged off by investors, though it was a significant step.
The Eurozone leading index EuroStoxx 50 declined by 0.35% to 5051.31 points, while the Cac 40 in Paris and the FTSE 100 in London each dipped around 0.5%. In contrast, the Dow Jones Industrial closed the European trading day higher by about 0.2%.
Following the interest rate decision of the ECB, real estate values were under pressure. Morgan Stanley analyst Bart Gysens sees little likelihood of additional price support after the interest rate cut. He downgraded Vonovia to "Underweight" and pulled his buy recommendation for LEG. Consequently, Vonovia dropped 7.2% in the Dax, and LEG declined by 5.0% in the MDax. Additionally, Aroundtown and TAG also faced a downturn.
Infineon shares surged after a positive analyst comment, gaining 3.7% and topping the Dax. Exane BNP Paribas raised its price target for the semiconductor company to 53 euros and predicted even more than 40% price appreciation.
Airbus faced concerns over delivery targets, and its shares fell 2.2%. The world's largest aircraft manufacturer had delivered only 53 passenger jets to its clients in May, and after five months, it hadn't even reached one-third of its yearly goal of around 800 aircraft.
The euro plummeted against the US dollar after the US job data and was last recorded at 1.0804 US dollars. The ECB had established a reference rate of 1.0898 dollars in the afternoon.
The yield on government bonds escalated from 2.59% the day before to 2.64%. Likewise, the bond index Rex retreated by 0.29% to 123.83 points. The Bund future shed 0.10% to 130.53 ticks.
(Note: The language has been simplified and made more engaging while maintaining the original text's meaning.)
Read also:
- Despite the minor setback in Frankfurt's stock exchange, with the DAX experiencing a slight decrease, the US economy's robust labor market continues to dominate headlines.
- In analysis of the US labor market, Thomas Altmann at QC Partners suggested that the strong labor market and fast wage growth may cause the Federal Reserve to delay lowering interest rates.
- Contrastingly, Vonovia, a prominent German real estate company, faced challenges in the stock market following the ECB's interest rate decision.
- Frankfurt's labor market is experiencing a slight unemployment rate increase to 4.0%, with 0.1 percentage point rise, despite the significant job creation and wage growth.
- Stock exchanges in Europe, including Frankfurt am Main, saw a dip in shares after the US job data revealed a surprising rise in unemployment and a robust labor market.
- The ECB's decision to cut interest rates had little impact on the Frankfurt stock exchange, as investors seemed to be focused more on the US labor market and potential interest rate hikes in the US.
