Frankfurt Stock Exchange: Investors pay attention to inflation signals in a buying frenzy

Investors' record mood could continue in the new stock market week.

Frankfurt Stock Exchange: Investors pay attention to inflation signals in a buying frenzy

Investors' record mood could continue in the new stock market week. While the highlights of the reporting season are largely over, the agenda for the last days of February primarily contains news about inflation. The Dax has to measure itself against its record high above the 17,400 point mark.

In Germany, preliminary data on the development of consumer prices in February is due on Thursday. Inflation signals from the USA are also published, which are based on private consumer spending. These are a particularly important indicator for the Fed. Deka chief economist Ulrich Kater expects the core rate, especially in US service prices, to rise sharply compared to the previous month.

“Market participants can no longer expect key interest rate cuts to be too rapid,” said Kater against this background. However, the prospect of a change in key interest rates from the summer is still enough to ensure a constructive mood among market participants.

If this continues, the German leading index would end February with a positive balance. It is currently up 2.8 percent this month after an increase of 0.9 percent in January.

“Investors have come to terms with the generally less euphoric expectations of interest rate cuts and are daring to take cover again,” says Robert Halver from Baader Bank, summing up the past few days with a rally, especially last Thursday. Even Japanese stocks have broken out - the leading index Nikkei 225 reached a record high after a dry spell of more than 30 years.

Top marks have recently become commonplace on the stock exchanges in Frankfurt and New York. Experts therefore also warn of the danger of a correction, although, in Halver's words, a "release of pressure" would be nothing unusual and perhaps even healthy for the market as a whole. "It would offer investors more favorable buying opportunities again after the markets have cleared up quickly - as has been usual of late," said Halver.

Experts definitely see some catching up potential for European stocks when their valuation is compared with those from the USA. “For the much-celebrated Nasdaq 100 tech index, the future expected price-earnings ratio (P/E ratio) is now 33. That is 11 points more than the average of the past 20 years,” warned stock market expert Thomas Altmann from asset manager QC Partners on Friday . In this country the situation is a little more relaxed, because the P/E ratio for the Dax is currently at 15 and therefore exactly on the long-term average.

On the corporate side, reports from DAX companies will still be the focus in the coming days. Munich Re opens its books on Tuesday, Beiersdorf, Covestro and MTU on Thursday and Daimler Truck and Volkswagen on Friday.

However, on Wall Street, which sets the pace, the most important publications with the exhilarating results from Nvidia are over. According to experts at Bank Societe Generale, around 90 percent of US companies have already presented their figures, mostly with positive surprises.

“The US economy cannot be brought down,” says investment expert Thorsten Weinelt from Commerzbank. “The series of key interest rate increases over the last two years has been dealt with surprisingly well.” However, the ISM Purchasing Managers Index for the US manufacturing industry, which is due to be published on Friday and thus heralds the start of the stock market month of March, is likely to be viewed critically in the new week.

As a leading economic indicator, this could be given particular weight by investors. The experts at Landesbank Helaba point out that the ISM index is still below the expansion threshold of 50. “Any scratch at this threshold could cause current interest rate expectations to swing again,” says the Landesbank’s outlook.