The week of the central banks has once again brought rising prices to the stock markets. Some calm is expected to return in the coming days as trading is shortened. Historical data for Holy Week points to a continuation of the rally.
25. March 2024. FRANKFURT (Börse Frankfurt). The prospect of falling key interest rates has once again boosted the stock markets in the past week. Whilst the Swiss National Bank has already gone ahead with its surprising interest rate cut, there are many indications in the eurozone and the USA that this will start in June. And anticipation is known to be the greatest joy. "The equity markets have welcomed the fact that the US Federal Reserve is still holding out the prospect of three interest rate cuts in 2024 despite the recent rise in US inflation," says Andreas Hürkamp from Commerzbank.
Public holiday and important US data on Friday
On Friday, the DAX reached its highest weekly close in its history at 18,206 points. After mixed data from the USA (Nasdaq 100 up 0.1 percent, S&P 500 down 0.1 percent, Dow Jones down 0.8 percent) and Asia (Nikkei down 1.2 percent, Hang Seng up 0.1 percent), the German benchmark index is expected to start the new week virtually unchanged.
The highlight of the week is expected to be Friday in the US, when new data on inflation trends will be published. The US monetary authorities are paying particular attention to the PCE deflator figures. In Germany, trading will already be at a standstill because the stock exchange will exceptionally only be open for four days due to the Good Friday holiday. Helaba's strategists assume that the financial markets will probably be quieter for the time being after the excitement surrounding the central banks and the record-breaking run before Easter.
New dividend record expected
Investors could therefore have time to take stock of the latest reporting season for DAX companies. According to LBBW, significantly more companies were able to exceed market expectations than in the previous quarter. After the last two companies presented their 2023 figures in the previous week, the hot phase of dividend distributions will slowly begin on Thursday with the Sartorius Annual General Meeting. Commerzbank has calculated in advance that 60 percent of DAX companies have announced a higher dividend and that the DAX dividend total will probably rise by one percent to a new record of 52.3 billion euros.
Will this continue to fuel share prices? LBBW is skeptical and has the impression that demand for shares "seems to be gradually flagging". Since late fall, the DAX has had an impressive run: "There were gains in 16 out of 21 weeks, and the five weekly losses never exceeded 1%," the analysts note. The last time there was a similarly long winning streak was in 2015, which was followed by a strong correction in the summer months. "The momentum was much stronger in 2015, but the parallels cannot be overlooked".
Hopeful Easter phenomenon
Jörg Scherer, technical analyst at HSBC, points out a "market anomaly in the run-up to important holidays" with a view to the coming days: "Analogous to the much better-known Christmas rally, the stock markets also tend to be strong in the week before Easter". According to the report, the DAX has risen in Holy Week two thirds of the time since 1988, generating an average gain of 1.02 percent. Maundy Thursday in particular should be highlighted as a "particularly positive trading day". According to Scherer, the Easter phenomenon in 2024 also coincides with "a stable upward trend phase characterized by new all-time highs".
Important economic and business events of the week
Monday, 25. March
15.00. USA: New home sales. A value of 675,000 is expected for February after 661,000 in the previous month.
Tuesday, 26. March
08.00 am. Germany: GfK Consumer Confidence. According to the consensus estimate, sentiment is likely to have improved slightly. However, the consumer confidence index is expected to remain in negative territory at minus 27 points.
Wednesday, 27. March
11.00 am. Eurozone: Economic Sentiment. According to Deka, the EU Commission's index, with an expected value of 96.3, should once again prove that the recovery in the eurozone is characterized by light and shade. "Sentiment in Spain is good with an upward trend, average in Italy and France and only poor in Germany," explain the economists.
Thursday, 28. March
1.30 pm. USA: GDP. After the second revision, economists expect GDP for the final quarter of last year to rise by 3.2 percent compared to the previous quarter.
Friday, 29. March
Germany: Stock market holiday (Good Friday)
1.30 pm. USA: PCE core rate. The Fed's preferred inflation indicator is clearly the focus of this week's economic data. Analysts at Commerzbank believe it is likely that the inflation rate will "remain stubbornly high" and that price momentum has actually increased recently. The overall rate is expected to rise by 0.4 percent and the core rate by 0.3 percent compared to the previous month. For the core rate, this would mean a year-on-year price increase of 2.8%, which is still well above the US Federal Reserve's two percent target.
from: Thomas Koch, March 25. 2024, © Deutsche Börse AG
Thomas Koch is a CEFA investment analyst, investment specialist for structured products and a certified certificate consultant. He has been a freelance journalist covering events on the capital markets since the beginning of 2006.