Monetary policy continues to set the pace, but now more and more companies are also reporting on the fourth quarter. Too much hope is misplaced, they say.
15 January 2024. FRANKFURT (Börse Frankfurt). The question of when interest rates will be lowered again continues to dominate the markets. The US producer prices for December published on Friday had risen less than expected, signaling a decline in inflationary pressure - and the possibility of interest rates falling soon. By contrast, the US consumer price inflation for December published a day earlier had indicated the exact opposite: it had risen more than expected.
All in all, the markets have been treading water since the beginning of the year: the DAX stood at 16,667 points on Monday morning after closing at 16,705 points on Friday and 16,750 points at the end of the year. In the USA, the Dow Jones reached a new all-time high on Friday, but then lost ground. The S&P 500 and Nasdaq 100 rose on Friday, but are still trading below their record highs.
The victory of the ruling Democratic Progressive Party in Taiwan was met with no major reaction on the markets. Helaba also points to rising geopolitical risks in connection with Yemen after the US-led alliance fired on Huthi positions in Yemen. "However, the impact of this on oil prices can still be described as limited."
"Outlook will be cautious"
Meanwhile, the reporting season that started in the US on Friday is picking up speed. This week, banks such as Morgan Stanley and Goldman Sachs are opening their books. "Against the backdrop of the recent robust US economy, we believe it is likely that S&P 500 companies will exceed the earnings forecast of 3 percent," says Thorsten Weinelt from Commerzbank. However, the stock markets have already risen significantly in advance. In addition, the majority of investors are now overweight in equities. Last but not least, although many companies are likely to present solid figures for the fourth quarter, the outlook for 2024 will often be cautious. "On balance, the equity markets should therefore only receive a moderate tailwind from a solid earnings season."
Rising profits, moderate share price gains
DekaBank is also looking at the reporting season: "Despite difficult external conditions, German corporate profits are likely to have risen compared to the same quarter last year," explains chief economist Ulrich Kater. From a macroeconomic perspective, no growth impetus is to be expected in the near future, but there are initial signs that the low in sentiment among German companies has been overcome. "This has laid a solid foundation for profit growth in the current year, which will enable a high level of dividend continuity and, with the prospect of monetary policy becoming looser again, also argues for moderate share price growth." The bank expects the DAX to reach 17,000 points in six months and 18,000 points in twelve months.
Chart technology: slight improvement, risks remain
According to Christian Henke from IG, the upward momentum on the international stock markets currently leaves a lot to be desired. The DAX is also not making any progress and the sideways phase is continuing. "For the DAX, this consists of the all-time high of 17,003 points and the former record high of 16,532 points," explains the chart technician. Momentum is falling and is below the zero line. "This represents a short-term downward trend."
Helaba sees a slight improvement in the technical picture, but the risks remain. "The MACD is still set to sell and the ADX is falling, while the DMI is holding its buy signal," notes Ulrich Wortberg. Holding points appeared at 16,541 points and then at 16,448 points, with initial resistance at 16,839 points, last week's high.
Important economic and business events of the week
Monday, January 15
USA: Martin Luther King Day. Stock exchanges remain closed.
10.00 am. Germany: GDP 2023.
Wednesday, January 17
3.00 pm. China: GDP 2023 Despite the ongoing real estate crisis and consumer restraint among private households, Chinese GDP is likely to have come close to the 5% growth target again in the fourth quarter, according to DekaBank. The most important pillar is the manufacturing industry, which in turn is benefiting above all from demand for "green technologies" such as electric cars, batteries and solar systems.
2.30 pm. USA: Retail sales December. According to Commerzbank, US retail sales are likely to have risen moderately, supported by solid auto sales figures.
Friday, January 19
4.00 pm. USA: Consumer Confidence Uni Michigan January. The sentiment barometer could have fallen slightly from 69.7 to 69 points, according to Deutsche Bank. The markets are likely to pay particular attention to the fall in consumer inflation expectations in December.
By Anna-Maria Borse, 15 January 2024, © Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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