The record run on the stock markets seems to have come to an end for the time being, but many analysts believe it will only be temporary. Interest rate cuts in the near future and the stabilizing global economy would argue for further price gains.
11. March 2024. FRANKFURT (Börse Frankfurt). Catching its breath instead of chasing further records - after reaching a new all-time high of 17,879 points on Thursday, the DAX is somewhat weaker at the start of the week. Previously, the euphoria of interest rate cuts had driven prices upwards. It is true that the interest rate cuts are unlikely to come as quickly as expected weeks ago. But they will come, according to the market, and in early summer. New signals as to how the central bankers will proceed are now being hoped for from the US inflation data for February, which is due tomorrow.
The DAX stood at x points on Monday morning after closing at 17,815 points on Friday. This is also due to the data from the USA, where the S&P 500 and Nasdaq 100 recorded losses on Friday after initial gains and new highs. The price of gold also reached a new historic high of USD 2,194.95 on Friday and is slightly weaker today. Bitcoin remains above 70,000 US dollars.
Global economy in "spring awakening"
However, no noticeable setbacks are expected for the stock market. "The interest rate cut fantasy may be heavily priced in. But if it actually materializes - after a delay - this will provide fresh impetus," says Robert Halver from Baader Bank. The global economy is also stabilizing. 2024 will not be a "global economic miracle year". However, interest rate cuts and massive investments in defense, infrastructure and general location improvements will at least lead to a spring awakening. "Positive surprises are also possible." Halver sees a need to catch up, especially in companies that have suffered from global economic concerns. "They are also valued much more favorably than the expensive tech stocks."
"Record high share prices call for caution"
Marthel Edouard from Weber Bank is also confident, at least in the medium and longer term: "Springtime is dividend time in Europe," he notes, forecasting record dividend payouts. "The expected dividend payments in Europe are almost 7% above the previous record year of 2023." Many companies reported high turnover and significantly increased profits - despite the weak economy. In addition, DAX companies generated over 80 percent of their sales outside Germany. Falling energy costs - by more than 60 percent since the beginning of 2023 - and a stable economic environment in the DAX companies' most important export countries provided support. The bank therefore considers the medium-term earnings and share price outlook to be fundamentally good, and not just for German companies. In the short term, however, there could be price setbacks. "Record high share prices, ambitious share valuations and euphoric sentiment call for caution in the short term."
Profit-taking possible
"The DAX almost made it last week, the 18,000-point mark was within reach," notes Christian Henke from IG. But at the moment it looks like a little breather. After the new all-time high, the DAX seems to be running out of steam a little. "Below the lowest low of the last five days at 17,619 points, there could be some profit-taking," explains the chart technician. The target would then be the 23.6 percent retracement at 17,133 points and the simple 50-day line at 17,059.
Important economic and business events of the week
Tuesday, March 12
1.30 pm. USA: Consumer prices February. According to DekaBank, US consumer prices caused quite a stir a month ago, particularly the sharp rise in prices in the "services excluding rents" category. The bank does not expect this to happen again in February. If energy and food are excluded, a relatively high price increase can still be expected.
Wednesday, March 13
11.00 am. Eurozone: Industrial production January. Industrial production is likely to have fallen noticeably in January, says DekaBank. Ireland is once again the main reason for this. Its production increase of more than 20 percent in December has now been followed by a strong negative rebound.
Thursday, March 14
1:30 pm. USA: Retail sales February. Consumer spending is likely to have grown by around 0.8 percent month-on-month in February following the January slump, according to Deutsche Bank.
Friday, March 15
Witches' Sabbath: Major expiry day for options and futures. Futures and options contracts on the DAX® as well as futures and options on individual shares expire four times a year on the Eurex derivatives exchange - on the third Friday in March, June, September and December. The witches' Sabbath falls on the same day on all major stock exchanges worldwide. This means that contracts on other indices, international equities, commodities, currencies, etc. also expire. On this day, there can be a high trading volume and sharp fluctuations in the prices of securities.
by: Anna-Maria Borse, March 11, 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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