Stock exchange in Frankfurt: Interest rate and inflation hopes are driving up the Dax

With tailwind from the USA and German inflation data, the Dax passed the 16,100 point mark on Wednesday.

Stock exchange in Frankfurt: Interest rate and inflation hopes are driving up the Dax

With tailwind from the USA and German inflation data, the Dax passed the 16,100 point mark on Wednesday. It has reached an interim high since the beginning of August. Newly awakened optimism about possible soon-to-be-falling key interest rates in the USA had given Wall Street a boost the day before. The trigger was statements by Christopher Waller, who is a member of the board of directors of the US Federal Reserve Bank.

In Germany, meanwhile, a significant decline in inflation rates in several federal states on Wednesday indicated a further decline in inflation. Consumer price data for Germany as a whole will follow in the early afternoon.

In this environment, the DAX rose by 0.97 percent to 16,147.81 points by midday. From a chart perspective, according to chief market analyst Jochen Stanzl from CMC Markets, the record high will now be within reach again by the end of the year. The German stock market barometer reached just under 16,530 points at the end of July. Since the interim low in October, the Dax had been rising for around four weeks and has now recovered by around 10 percent.

The MDax for medium-sized companies rose by 1.00 percent to 26,267.93 points on Wednesday afternoon.

Waller has encouraged investors in their monetary policy optimism, said Stanzl. Fed President Jerome Powell will still speak on Friday, "but after Waller's speech, investors see their expectations confirmed that the next step will be a turnaround in monetary policy." The market is now expecting four small interest rate cuts from the Fed next year.

On Thursday, however, data on inflation from some euro countries and the USA will be available.

Interest rate hopes particularly drove the real estate sector. Vonovia gained 2.3 percent and LEG 3.0 percent. Aroundtown remained largely excluded from the optimism at minus 3.7 percent. However, the SDax share had fallen by up to eleven percent in the morning. The bottom line is that the commercial real estate specialist is deeply in the red due to the weak environment.

Reclassifications moved some car stocks out of the Dax. The US bank JPMorgan was particularly cautious about VW, while assessing BMW more positively. The internationalization of the automotive market will continue in 2024, emphasized analyst Jose Asumendi in his sector study. New suppliers from China and North America appeared on the scene, gained market share and shook up the market. Large established manufacturers such as Volkswagen have been recording market share losses in this situation for several years. BMW, on the other hand, has a well-balanced strategy to secure profits and market shares.

Asumendi downgraded VW preferred shares to "neutral" and also lowered the price target. At the same time, BMW was upgraded to “Overweight” and the price target was raised. BMW then rose by 2.3 percent. VW recently shook off its early losses and rose by 0.7 percent.

The private bank Berenberg was more positive about the wafer manufacturer Siltronic. She raised the stock to “Buy” and also raised the price target, which gave the stock an increase of 8.8 percent. After six consecutive quarters of slowing growth and a year marked by lower profitability, the tide is likely to turn for the wafer maker in 2023, it said.

Borussia Dortmund gained 7.9 percent at the top of the SDax. The Bundesliga club mastered the toughest group in the Champions League with flying colors and reached the round of 16 early.

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