Is inflation really a thing of the past? The current US consumer prices this week could provide some clues. Increasingly, however, the stock market is also focusing on the US election in November.
8 January 2024. FRANKFURT (Börse Frankfurt). New year, old topics: Even at the start of 2024, almost everything revolves around interest rate expectations. The interest rate peak seems to have been reached, but when exactly will the central banks cut key interest rates again? This week, the market is therefore eagerly awaiting the US inflation figures for December, which will be published on Thursday. "Despite last week's correction, the still very pronounced rate cut expectations regarding the Fed will be put to the test again if inflation picks up again," notes Ralf Umlauf from Helaba. The reporting season in the USA also starts this week. On Friday, the first companies will publish their figures for the fourth quarter of 2023, specifically J.P. Morgan, Bank of America and Citigroup.
The DAX stands at 16.585 points on Monday morning; on Friday, the index closed at 16,594 points - a drop of almost 1 percent in the first trading week of the new year.
"Election years are usually good stock market years"
Daniel Schär from Weber Bank is quite confident about 2024 as a whole. He does not expect much in terms of economic growth in Europe and the USA. However, despite all the problems - such as high interest rates - election years have been good stock market years in 83% of cases. In addition, the earnings prospects for companies are not bad, with growth of 10 percent expected for the MSCI World. Although the earnings prospects for Europe are more moderate, the Head of Portfolio Management still sees opportunities, especially for small companies. He fears disappointment for the tech stocks that will be so successful in 2023.
Commerzbank also refers to the US election in November. "We should familiarize ourselves with a possible second Trump term. This is likely to pose a considerable challenge for the EU in particular," explain analysts Bernd Weidensteiner and Christoph Balzt. Nevertheless, the success of the 2024 equity year will not depend on the outcome of the US election. "The decisive question is how negatively the US Federal Reserve's drastic interest rate hikes will affect the US economy and S&P 500 corporate earnings in 2024."
Nothing to expect seasonally yet
According to chart technician Christoph Geyer, the seasonal statistics do not indicate a sustained upward trend. This is not expected until the end of March. The most recent setback came as no surprise to Geyer: "The expected DAX pull-back has occurred." The fact that the attack on the 17,000-point mark at the end of the year was unsuccessful and the high level could not be maintained led to an intraday change in sentiment. "However, some indicators have already fallen into oversold territory and could soon generate buy signals or have already done so," explains Geyer.
Geyer
Important economic and business events of the week
Tuesday, January 9
8.00 am. Germany: Industrial production November. Production in the manufacturing sector has not increased for six months in a row, explains DekaBank, referring to a "long period of hunger". Such weakness has only occurred twice before, during the global financial crisis and at the beginning of the 1990s. However, according to the bank, this negative run could now have been broken in November. For December, however, economic indicators such as the toll figures suggest a renewed decline.
Thursday, January 11
2.30 pm. USA: Consumer prices December. US consumer prices are likely to show a slight increase in the overall inflation rate, says DekaBank. The reason: the price-dampening effect of energy prices will be lower than in the previous month. For the core rate excluding food and energy, the bank expects a further decline. However, at 3.8%, it would still be relatively well above the Fed's target of 2%.
by: Anna-Maria Borse, 8 January 2024, © Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
Feedback and questions to redaktion@deutsche-boerse.com
Borse