Markets Unwrapped: A Midday Check-In
After reaching an accord, the volume control of VW vehicles started to diminish.
The calm before the holiday storm, markets contented themselves on the final trading day before Christmas. In Germany, the Dax slipped 0.01%, settling at 19,882 points, while the MDax gained 0.1% to 25,567 points. The Euro Stoxx 50, however, dipped by around 0.1%.
After a series of setbacks, the Dax struggled to regain the 20,000-point mark in recent times. Last week's Federal Reserve's interest rate projections caused investors to cash in their profits. On Friday, the Dax dipped to its lowest since the start of December, surrendering most of the previous year-end rally. Still, a robust gain of nearly 19% for 2024 remains hard-earned.
Volkswagen's stock took a rollercoaster ride following the wage dispute resolution. Shares initially gained 1.6%, climbing to heights not seen since late October, only to swiftly lose ground. The automaker sealed a deal to cut over 35,000 jobs by 2030, with a commitment to save 1.5 billion euros in labor costs annually. Analysts, including Philippe Houchois at US investment bank Jefferies, indicated the agreement did not meet original expectations for management and investors. Concerns about competition's swift pace and the daunting automotive industry environment linger.
Defense stocks saw a boost on expectations of increased military spending by NATO countries in Western Europe. Stocks such as Rheinmetall, Hensoldt, and Renk surged between 1.5% and 3.8%. NATO Secretary General Mark Rutte hinted that Trump's incoming administration might exert pressure for European alliance nations, like Germany, to contribute more.
Investors took profits off DWS shares, with the stock falling by 1%. Financial regulator Bafin reportedly launched a special audit at the Frankfurt-based company, focusing on its handling of sustainability issues.
Borussia Dortmund's share prices were buoyed by an away Bundesliga win against VfL Wolfsburg, moving 1.4% higher. With 25 points and 6th place in the table, Dortmund approaches the coveted Champions League spots.
Novo Nordisk's shares saw a rebound following a steep decline on Friday. The Danish pharmaceutical company battled a setback in the development of its next-generation weight loss injection, CagriSema. Clinical trial results showed a 22.7% weight loss among obese patients, falling short of the company's anticipation of up to 25%.
At the London Stock Exchange, the final agreement on the takeover by rival Aviva propelled British insurer Direct Line's shares by 3.4%. Aviva advanced half a percent. The companies agreed to a takeover of Direct Line for £3.7 billion, with shareholders to receive 0.2867 new Aviva shares, 129.7 pence in cash, and up to five pence in the form of a dividend for each Direct Line share. "Christmas has come early for Direct Line investors," said Matt Britzman, an analyst at investment firm Hargreaves Lansdown.
- Despite a series of setbacks, the Dax, managed by Britzman, is aiming for a robust gain of nearly 19% for 2024 in the finance industry.
- In Germany, the stock of Borussia Dortmund increased by 1.4% following a successful away Bundesliga win, demonstrating the impact of business results on stock prices.
- Defence stocks, such as Rheinmetall and Hensoldt, gained significantly on the German DAX, driven by expectations of increased military spending in the technology sector.
- The stock of Novo Nordisk saw a rebound after a setback in the development of its next-generation weight loss injection, CagriSema, highlighting the importance of technological advancements in the pharmaceutical industry.
- The final agreement on the takeover by Aviva initiated a surge in British insurer Direct Line's shares, demonstrating the impact of significant corporate events on stock prices within the finance industry.
