DHL 2004 Annual Report Download - page 47

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Economic Environment
US dollar weak
The US currency got off to a weak start in 2004, as shown by the following diagram. By
February the euro had passed the US$1.28 mark, a record high up until then. The cur-
rency markets then settled down again, before focusing on the impact of the American
current account and federal budget deficits in the fall. The US dollar came under massive
pressure against the euro. At the end of the year, the euro was worth US$1.36, a historic
high; its overall gain in the course of the year was almost 8%.
Stock markets see end-of-year rally
The international stock markets were unable to profit from the strong upturn in the
global economy in the first half of the year, as investors were skeptical whether the recovery
would last. In the summer, the sideways movement in the markets even threatened to
collapse under the pressure of the climbing oil price, which fuelled overall gloom about
the economy. However, as of late summer this skepticism disappeared owing to the high
degree of stability of the US economy in particular and a further improvement in com-
pany profits. In the fall, the stabilization of the stock markets was followed by an end-of-
year rally that resulted in positive overall developments for the leading stock market
indices. The S & P 500 grew by 9.2% in 2004, while the Euro STOXX 50 and DAX, at 7.3%
each, were only slightly lower.
Bond market offers attractive environment for corporate bonds
The European bond markets mirrored the ups and downs on the American capital
markets until the middle of the year. On balance, long-term interest rates in the euro zone
saw a slight increase. Reflecting the growing uncertainty about the economic recovery,
capital market rates dropped appreciably from mid-year on in both the USA and in
Europe. From October, the robust domestic economy and repeated increases in key inter-
est rates led to a rise in US capital market rates, whereas the strong appreciation of the
euro meant that European long-term interest rates developed independently and eased
overall in 2004. The falling interest rates benefited corporate bonds in particular. The
risk premium as against government bonds decreased still further, so the environment
for corporate bond issues remained highly attractive.
1.40
1.35
1.30
1.25
1.20
1.15
12/31/03 02/27/04 03/31/04 04/30/04 05/31/04 12/30/04 01/30/04 06/30/04 07/30/04 08/31/04 09/30/04 10/29/04 11/30/04
The US dollar in 2004
in €
43
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