Stocks in the auto industry experience strain following Trump's inauguration, while Siemens Healthineers secures a victory
Today's Market Brief: The DAX Takes a Pause Amid Trump's Trade Wars and Focus on German Auto Stocks and Siemens Healthineers
Following a record-breaking streak, the German benchmark index, the DAX, is taking a breather today, although it managed to surpass the 21,000-point mark momentarily. Meanwhile, the market's attention is divided between the repercussions of Donald Trump's inauguration as US President and the performance of German auto stocks and Siemens Healthineers.
Donald Trump's fiery rhetoric and protectionist trade policies are causing unease on financial markets. As the prospective "savior" for America, Trump promised an economic revival with his "America First" policy, espousing lower inflation, boosted energy production, and import tariffs. According to economist Lizzy Galbraith from asset manager abrdn Investments, Trump may significantly increase tariffs on Chinese imports. However, she anticipates that he will avoid a global base tariff, opting for more selective actions to resemble a "Trump unleashed" scenario.
The auto sector is particularly vulnerable to Trump's policies, with losses ranging from 1.3 to 2% for Porsche AG, Mercedes-Benz, Volkswagen, and BMW—BMW is currently at the bottom of the DAX, enduring a 1.6% loss. On a more positive note, Siemens Healthineers is leading the pack with a 2.8% gain, catching the attention of analysts such as Philip Buller from private bank Berenberg. Despite minor concerns about wind businesses and valuation, Buller encourages investors to seize the recent dip as a buying opportunity.
Enrichment Data:- While European (including German) auto stocks dropped by 2% following Trump's announcement of increased tariffs, Siemens Healthineers is responding by shifting manufacturing to the U.S.- The U.S.'s reimposed 25% tariff on German cars and car parts raises production and export costs, potentially reducing profit margins.- In the short term, Siemens Healthineers is investing heavily in U.S. manufacturing, but it comes with the temporary risk of supply chain disruptions.
Contains material from dpa-AFX
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Technology companies in the sports sector might face increased costs due to Donald Trump's tariffs on Chinese imports, as they rely on Chinese manufacturing for equipment and supplies. Siemens Healthineers, however, is proactively mitigating this risk by expanding its U.S. manufacturing, aiming to capitalize on potential opportunities in the American market despite the short-term risks of supply chain disruptions.
