Companies like Bechtle are reaping benefits from the economic recovery, while efforts to halt the rise in Commerzbank's stock appear unsuccessful.
Munich Re, the German reinsurance giant, saw its stock price fall despite a significant increase in its first-half profit. The company's shares dropped by around 5.1% to €564.40 in the afternoon, primarily due to ongoing price declines in reinsurance contracts, signalling concerns about future profit margins and revenue growth [1][3].
Despite the challenges in pricing and a slight downward revision of expected insurance revenue, Munich Re maintains its full-year guidance of a net result of €6.0 billion for 2025 [2]. The company expects insurance revenue to be around €62 billion, reduced from an earlier expectation of €64 billion, while remaining confident in its core business performance.
Meanwhile, IT services provider Bechtle significantly benefited from its reported figures, gaining 9.1% to €40.22 by late afternoon [4]. Bechtle now sees a recovery in the second quarter and has confirmed its full-year forecast. The company's strong performance has led Jefferies analysts to rate Bechtle as a 'buy' with a price target of €48.
The German benchmark index, the DAX, has gained more than 3% in the past week, currently targeting 24,639 points [5]. Commerzbank continued to rise, gaining 3.7% to €34.55 by afternoon in the Dax [1]. In the MDax, Bechtle's gains were not the only positive movement, as the index closed 0.5% higher by late afternoon, and the Euro Stoxx 50 was up 0.2% [4].
Market participants had feared a slowdown in Bechtle's business due to Cancom's disappointing results, but these fears seem to have been unfounded [6]. The euro remained virtually unchanged against the dollar at $1.1653 [1], while the benchmark Bund future fell 0.4% to 129.74% [1].
Robert Greil, chief strategist at Merck Finck, expects a further increase in US inflation in July, and Greil predicts the Fed will consider a rate cut in September due to weak employment figures and rising inflation [7]. Thorsten Wenzel, DZ Bank analyst, believes the results of the June/July renewal confirm the peak in the reinsurance cycle has passed [8].
The war between Russia and Ukraine has hopes for a peace or ceasefire supporting stock markets [9]. The markets are being driven by the prospect of a Fed interest rate cut as early as September [2]. These factors, combined with strong performances from companies like Bechtle, continue to shape the current market landscape.
[1] Reuters [2] Bloomberg [3] Munich Re press release [4] Financial Times [5] CNBC [6] Handelsblatt [7] Bloomberg [8] DZ Bank research note [9] Reuters
Munich Re, despite the increase in first-half profit, saw its stock price fall, indicating potential concerns about future financial performance due to declines in reinsurance contracts. In contrast, IT services provider Bechtle significantly increased its stock price, signaling strong investment opportunities and growth prospects in its business.
