With the clear signal that there will likely be three interest rate cuts in 2024, the US Federal Reserve has fulfilled investors' hopes. The DAX reacts accordingly positively and climbs above 17,000 points for the first time in its history.
Towards midday the momentum noticeably waned; the German leading index still had an increase of 0.78 percent to 16,896.97 points. The gain in the year-end rally since the interim low in October amounts to 15.5 percent. The Dax is a so-called performance index. This means that company dividends are taken into account in the calculation.
The key interest rate decision by the European Central Bank (ECB) in the afternoon and the subsequent press conference with ECB boss Christine Lagarde could have a further significant impact on prices.
Things are going even better for the indices behind the DAX. The MDax of medium-sized stocks rose by 3.03 percent to 27,229.03 points. The small cap index SDax gained 3.27 percent to 13,501.59 points. In addition, the Eurozone index EuroStoxx rose by one percent.
The prospect of falling interest rates is good news for stock investors. Stocks are becoming more attractive again compared to fixed-interest securities. Loans are becoming cheaper, companies can therefore finance themselves more easily, and investments are becoming more affordable. In New York, investors had already reacted enthusiastically to the Fed's statements the day before, with the Dow Jones Industrial reaching a record high.
Real estate stocks reacted to the new interest rate prospects with high price gains. Vonovia, for example, climbed more than eight percent in the Dax, driven by a buy recommendation from ING. The European real estate sector, the strongest in the Stoxx 600 industry overview, recorded an increase of almost six percent. Construction and real estate financing becomes cheaper again when interest rates fall, which can stimulate demand on the housing market.
A report by the magazine “Der Spiegel” caused the shares of DHL and Telekom to fall sharply by up to 2.9 percent. According to the magazine, the federal government wants to finance the restructuring of Deutsche Bahn with sales of shares in Telekom and DHL.
The traffic light had to rethink its approach after the Federal Constitutional Court's budget ruling. In Telekom, the government probably only wants to hold a strategic stake of 25 percent plus one share. It is currently 30.34 percent. At DHL, however, Ampel is planning to sell more shares, the magazine writes. The share of the federally owned KfW was most recently 20.49 percent.
The engine manufacturer Deutz wants to take over some activities from the drive system and large engine manufacturer Rolls Royce Power Systems. The expected purchase price is said to be in the higher double-digit million euro range. Deutz shares rose by 6.8 percent. The purchase price seemed to be a bargain, said a dealer.