Profits surge for Bechtle amid recovery, obstacles persist for Commerzbank's shares
German Markets Show Mixed Results Amidst Global Economic Uncertainties
German markets displayed a mixed performance in the latest trading session, with the DAX aiming for its all-time high of 24,639 points, while the German leading index closed 0.1% lower at 24,163 points.
The DAX's positive trajectory can be attributed to expectations of a Federal Reserve interest rate cut as early as September. However, the benchmark Bund future fell 0.4% to 129.74%, indicating a different story for government bonds.
One of the notable movers in the DAX was Commerzbank, which gained 3.7% to 34.55 euros by afternoon. Despite the lack of specific details about its gains, the bank continues to rise, contributing to the overall positive sentiment in the market.
On the other hand, Munich Re's stock price dropped despite an increase in first-half profit and no change in the annual profit target. The company reported a strong first-half profit of €3.2 billion and reaffirmed its annual net profit target of €6.0 billion. However, the decline in insurance revenue, primarily due to negative foreign exchange effects and a 5% cut in the revenue forecast for 2025, overshadowed the profit figures and caused investor concern. As a result, Munich Re's stock fell 5.1% to 564.40 euros by afternoon, disappointing investors.
Despite the revenue reduction, DZ Bank continues to recommend Munich Re as a "buy" with a price target of 640 euros. Thorsten Wenzel, DZ Bank analyst, believes that the results of the June/July renewal confirm that the peak in the reinsurance cycle has been passed.
In contrast, Bechtle significantly benefited from its reported figures, gaining 9.1% to 40.22 euros by late afternoon. Initial fears of a decline due to Cancom's disappointing results were alleviated as Bechtle now sees a recovery in the second quarter and has confirmed its full-year forecast. Jefferies analysts rate Bechtle as a "buy" with a price target of 48 euros.
The MDax gained 0.5% by late afternoon, with Bechtle's strong performance contributing to the index's positive performance. The Euro Stoxx 50 was 0.2% higher, reflecting a generally positive sentiment in European markets.
Looking ahead, Robert Greil, chief strategist at Merck Finck, expects a further increase in US inflation in July, leading to a potential Fed rate cut in September. However, Greil also predicts that US import tariffs are likely to be increasingly passed on to consumers and that an American September interest rate cut is unlikely to be the last one this year. These global economic uncertainties continue to influence market movements and are likely to remain a key factor in the coming months.
- Despite the positive trajectory of the DAX, the fall in the benchmark Bund future indicates that some investors are cautious about government bonds, suggesting a mixed outlook for the financing and investment aspects of the German business sector.
- In the midst of these global economic uncertainties, Robert Greil, a chief strategist, expects further increases in US inflation and potentially more interest rate cuts, which could impact both domestic and international business investments and financing decisions.
