Nvidia is doing business
DAX climbs from record to record
February 22, 2024, 7:20 p.m
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The German stock index DAX is inspired by the rally at US chip designer Nvidia and is climbing strongly. But companies in other sectors can also make significant gains today.
The DAX has jumped to a new all-time high thanks to the rally around Nvidia. The index rose by 1.5 percent to 17,370 points and even reached 17,430 points at one point. Record sales of over four billion euros with the 40 DAX stocks underpinned the upward breakout. The Euro-Stoxx-50 also rose significantly and ended the day 1.7 percent higher at 4855 points. In Japan, the Nikkei index rose to a new record this morning, the first since 1989.
The rally in technology stocks also spread to other sectors and increased investors’ appetite for risk. The business figures from chip designer Nvidia had confirmed that the AI rally is not a bubble, but is supported by real sales and profits.
In addition, the markets also had to digest a flood of business figures from the reporting season; there were new meeting minutes from the ECB and the US Federal Reserve as well as fresh purchasing manager indices (PMI) around the world. “That’s a month’s worth of data in one day today,” said one trader.
Nvidia business figures surprise
Nvidia’s business figures caused a buying frenzy in the technology sector: the industry index was ahead in Europe with an increase of three percent. Chip stocks were particularly in demand in Europe, with Infineon increasing by 2.2 percent in the DAX.
Nvidia had beaten expectations in terms of both sales and profits in the highly anticipated business figures. Sales were billions higher than expected, and the profit margin reached a gigantic 77 percent. In the USA, Nvidia shares rose by 14.9 percent towards the end of trading in Europe, meaning that the member of the so-called “Magnificent Seven” is now expected to become the third largest US company again.
The new Purchasing Managers’ Indices (PMI) around the world showed the first signs of recovery in the spring – except in Germany. Here, industry in particular fell into the abyss: its industry PMI deteriorated further to 42.3 points, although a minimal recovery to around 46 points had been expected. In France and Italy, however, things looked significantly better, so that the overall PMI for Europe climbed exactly to the expansion threshold of 50.0 percent, despite Germany.
Mercedes-Benz shares are climbing
There were also the minutes of the most recent central bank meetings: At the Fed it was clear that most participants see risks in cutting interest rates too quickly. Regarding the ECB minutes, it was said that the voices of the deaf on monetary policy could now be heard more clearly. Both protocols were considered rather dovish.
Mercedes-Benz shares climbed 4.7 percent. Although the business figures showed a decline in profits, they were still mostly above expectations. The increase in the share buyback program by up to three billion euros was the main driver of the share price. Allianz rose 1.8 percent to an annual high. At Axa, sharp dividend increases helped the share price increase by 2.8 percent and at Zurich Insurance by 2.6 percent. “That puts Allianz under pressure,” said a trader. Allianz will present business figures on Friday. SAP rose with technology stocks by three percent. The dividend announcement with an increase to 2.20 after 2.05 euros in the previous year was in line with expectations.
Although Heidelberg Materials has decided on a new share buyback program of up to 1.2 billion euros, more was expected from the business figures: the shares slipped by 3.3 percent. Nestle lost 4.9 percent. Although the figures fluctuated around analyst expectations, growth is weakening: after an increase of 7.2 percent, organic growth is only expected to reach four percent.
Unilever was also slowed down and fell by 0.5 percent. Danone was only 0.1 percent lighter. Here, the free cash flow was slightly above expectations, the dividend rose by five percent and the CEO was convinced that Danone could defend the high prices due to its pricing power.