Stock Market Wrap-up: A Mixed Bag on Christmas Eve
Volkwagen vehicle's volume adjustment altered following settlement agreement.
Investors on the German stock market took it easy on the penultimate trading day before Christmas. The Dax was down 0.01%, hovering at 19,882 points by noon, while the MDax showed a modest 0.1% rise to 25,567 points. The Euro Stoxx 50 slipped by about 0.1%.
The Dax had been on a losing streak, pushing it away from the 20,000-point mark. Last week, investor reactions to the Fed's interest rate forecast saw a spate of profit-taking. On Friday, the Dax plummeted to its lowest level since early December and gave up most of the year-end rally. Yet, the index is still set for a substantial gain of nearly 19% for 2024.
Volkswagen shares began on a positive note after a settlement in the wage dispute at the automaker. However, these gains didn't last long, with the shares dipping 2.5% by the end of the day, making them the biggest losers among the 40 Dax stocks. Volkswagen plans to reduce more than 35,000 jobs in a responsible manner by 2030, aiming to save 1.5 billion euros per year through decreased labor costs. The company also guaranteed new job security until 2030, with no immediate plans for plant closures. However, this agreement fell short of initial management and investor expectations, according to analyst Philippe Houchois of Jefferies. Given the fast pace at which competitors are moving and the tough environment in the automotive industry, analysts at Oddo BHF private bank cautioned that profits may be delayed or insufficient.
Defense stocks received a boost due to the prospect of increased military spending by NATO countries in Western Europe. Rheinmetall, Hensoldt, and Renk shares rose between 1.5% and 3.8%. NATO Secretary-General Mark Rutte expects increased pressure from the incoming US President Donald Trump to address the relatively low defense spending of European alliance countries like Germany.
DWS shares took a hit, dropping 1% as the financial supervisory authority Bafin reportedly launched a special audit of the Frankfurt company, focusing on its handling of sustainability issues.
Borussia Dortmund's end-of-year performance supported the stock market. The team's away victory in the last Bundesliga game of 2024 against VfL Wolfsburg propelled shares included in the SDax by 1.4%. Dortmund is close to securing the coveted Champions League spots with 25 points and 6th place in the table.
Novo Nordisk shares rebounded after a tumultuous day on Friday. The pharmaceutical company had faced a setback in the development of CagriSema, its next-generation weight loss injection. In a crucial Phase 3 clinical trial, CagriSema resulted in a 22.7% weight loss in obese patients, below Novo Nordisk's expectations of up to 25%. CagriSema, a combination of cagrilintide and semaglutide, is currently in phase 3 clinical trials that will run through October 2026[1]. The drug has shown an average weight loss of 15% for participants over about seven months[1]. A phase 3 study is also underway to compare CagriSema directly against Zepbound (tirzepatide), another weight management medication[1].
In London, the final agreement for the takeover of UK insurer Direct Line by rival Aviva pushed shares up 3.4% to 251.40 pence. Aviva shares advanced by half a percent to 459.30 pence. The companies have agreed to a takeover of Direct Line for £3.7 billion (around €4.5 billion), with shareholders receiving 0.2867 new Aviva shares, 129.7 pence in cash, and up to 5 pence in the form of a dividend for each Direct Line share[3]. Matt Britzman, analyst at investment firm Hargreaves Lansdown, commented, "Christmas has come early for Direct Line investors."
- Despite a modest decline in the Dax, it is still expected to show a substantial gain of nearly 19% for 2024.
- Volkswagen stocks saw a dip of 2.5%, making them the biggest losers among the 40 Dax stocks, despite the company's plan to save 1.5 billion euros per year through decreased labor costs.
- Defence stocks such as Rheinmetall, Hensoldt, and Renk experienced a rise of up to 3.8% due to the prospects of increased military spending by NATO countries.
- Novo Nordisk shares rebounded after a setback in the development of CagriSema, with the drug showing an average weight loss of 15% for participants over about seven months in phase 3 clinical trials.
