Just a November rally or a year-end rally? There is currently a lot of confidence that the November upward trend will continue in December. However, much now depends on how the economy develops.
4 Dezember 2023. FRANKFURT (Börse Frankfurt). The time for raising interest rates is over - this hope has recently caused the stock markets to rise sharply. This could well continue, according to reports. In any case, the signals from the USA are good: the S&P 500 and Dow Jones climbed to new highs for the year on Friday, while the Nasdaq remained just below them. The trigger was a speech by US Federal Reserve Chairman Jerome Powell. He only said familiar things and didn't raise his tone.
No interest rate adjustments were expected for next week's Fed meeting anyway. What is new is that the first full interest rate cut is now expected as early as May 2024.
"Interest rate optimism must be confirmed by the economy"
According to Claudia Windt from Helaba, the DAX could fall to its old high of 16,470 points this week. "However, it remains a balancing act," says Windt. This is because economic activity is gradually cooling, at least in the USA; how much will become clear in the coming weeks.
Thorsten Weinelt from Commerzbank also emphasizes that the interest rate optimism must now also be confirmed from the economic side. The US labor market report due on Friday is therefore particularly important. Even if the figures are probably inflated by a special effect (strikes) and the employment figures are likely to have risen somewhat more strongly again, this will not change the downward trend on the US labor market. "Together with the weaker consumer trend, this will probably ensure that the Fed believes it is on the right track in its fight against inflation and should consider cutting interest rates in future rather than taking further braking measures."
Indicators turned upwards again
According to Christoph Geyer, the zone around 16,000 points was used for a short breather and now market participants seem to have gathered themselves to launch an attack on the previous record levels. "The indicators have turned upwards again in the overbought area and are therefore unlikely to prevent a new record high," explains the chart technician. However, it is still unclear whether there will be a sustained breakout with a continuing trend or a behavior like in the summer. "As the seasonal probability indicates another small dip, it could be that a new record high will initially be short-lived."
Geyer
"Headwind after a brilliant November rally"
Moritz Kraemer, Chief Economist at LBBW, looks ahead to the new year: shares will initially move sideways, then go up - according to the bank's forecast. "After the brilliant November rally, the stock markets are likely to feel a headwind for the time being." The weak economy is dampening earnings momentum and wage increases are putting pressure on margins. Only with the foreseeable turnaround in interest rates will shareholders regain a little more appetite. "After a weak first half of the year, the DAX will then gain momentum and could climb to 18,000 points by the end of 2024."
Important economic and business events of the week
Monday, December 4
16.00. USA: New industrial orders October. US industrial new orders are likely to have weakened significantly, says Commerzbank.
Tuesday, December 5
Review of the DAX indices: Every three months a decision is made as to which companies are to be included in the DAX, TecDAX, MDAX and SDAX selection indices or have to leave them. The results are usually published shortly after 10 pm.
Wednesday, December 6
Trading Charity: Trade and help. For every order executed via the Frankfurt trading venue, Deutsche Börse and the specialists operating on the trading floor will donate the fees to Tafel Hessen e.V., Eintracht Hessen, ASB-Wünschewagen and Kiniki gAG.
Thursday, December 7
8.00 am. Germany: Industrial production October. According to DekaBank, there is a high probability that production fell for the fifth consecutive month in October. This has not happened since the global financial crisis and only once before - at the beginning of the 1990s.
Friday, December 8
14:30. USA: Unemployment figures for November. In the USA, several strikes ended in November, as Commerzbank notes. As a result, employment probably rose somewhat more strongly again in November. However, this does not change the fact that the US labor market is weakening.
by: Anna-Maria Borse, 4 Dezember 2023, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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