After the strong first quarter and a weak April so far, the mood on the German stock market is likely to remain moody for the time being. Stock market experts see the German leading index still in correction mode.
The optimists among them speak of a “swing exchange” or a “breather”. Nobody expects the Dax to make a quick new attempt to climb back towards the record high of 18,567 points reached after Easter. However, experts consider a course correction towards 17,700 points to be entirely possible given the appropriate news situation.
That's not surprising, because in the US, according to the March inflation data, at least that's what chief market analyst Jochen Stanzl from CMC Markets believes, "both the June and July dates for an interest rate cut are off the table." The only reason this did not lead to a major decline on the stock markets was that the majority of the market assumed that the US economy could tolerate higher interest rates for a longer period of time. “Now the reporting season must show whether this also applies to individual companies.”
Reporting season begins
It won't be long before the test is put to the test. After the first US banks started the reporting season in the world's largest economy, other companies will follow in the new week: the US investment bank Goldman Sachs will present figures on Monday, as will Morgan Stanley, Bank of America and the pharmaceutical and consumer goods company Johnson
In Europe, the start will be made by chip industry supplier ASML on Wednesday and in this country by the DAX group Sartorius. The pharmaceutical and laboratory equipment manufacturer plans to publish its quarterly balance sheet on Thursday. The consumer goods manufacturer Beiersdorf previously reported on its sales development on Tuesday. However, the reporting season doesn't really get going until the following week.
Potential for disappointment in the USA
This means that investors worldwide are likely to remain torn between concerns about interest rates and profit fantasies that are becoming increasingly verifiable. The potential for disappointment could be higher in the USA, because while the bar is set high in the world's largest economy, analysts in Europe have already lowered their expectations somewhat, as analyst Frank Klumpp from LBBW states.
On the economic side, the focus in the US in the new week will be on the retail data for March, which is due at the beginning of the week. After all, the question is whether “the US consumer has remained indestructibly willing to spend,” as Christian Apelt from Helaba writes.
He and Christoph Balz from Commerzbank are no longer expecting the same strong increase as before, but at least they are still expecting a moderate one. Among the other important US data, industrial production will come into focus on Tuesday. If both data turn out to be stronger than expected, LBBW expert Klumpp expects this to further fuel the current US interest rate scenario of “higher interest rates for a longer period of time”.
The economy could take off
In this country, the ZEW economic expectations could still change. LBBW and Helaba are expecting a slight increase following recent positive surprises in the leading indicators for the German economy and globally. The expected economic upswing now appears to be taking hold, writes Helaba analyst Stefan Mütze. The recent increase in production, including in the German energy-intensive industry, shows that it should not be written off despite the difficult economic conditions.
Dax recovery failed today
After an initially friendly trend, the DAX closed today with slight losses. The pressure on the German stock market came in the afternoon from US economic data, disappointed reactions to quarterly reports from US banks and a weak US stock market start. The mood of investors, who had regained their courage in the morning, suddenly deteriorated again.
The German leading index, which had temporarily climbed towards 18,200 points, ultimately lost 0.13 percent to 17,930.32 points. On a weekly basis, the DAX recorded a loss of 1.4 percent. The MDax, the index of medium-sized stock market stocks, fell by 0.47 percent to 26,576.83 points.
The situation was similar across Europe, with the exception of the London Stock Exchange. The EuroStoxx 50, the leading index for the euro zone, lost 0.23 percent to 4955.01 points. In the USA, the technology-heavy Nasdaq stock exchange in particular posted significant losses, but the best-known Wall Street index, the Dow Jones, was also weaker at the close of trading in Europe.
