What will the Fed in the US and the ECB in Europe decide on interest rates next week? Investors seem to be eagerly awaiting it.
After a phase with little momentum, the Dax could get going again in the new week. With the interest rate decisions by the US Federal Reserve on Wednesday and the European Central Bank (ECB) on Thursday, there are fresh impetus that investors seem to be eagerly awaiting. The leading German index had recently fluctuated around 16,000 points, but was at least able to maintain a high level.
Rising bond yields had recently dampened investors’ appetite for equities. The market is counting on further increases in key interest rates, at least at the ECB – all the more so after the Australian and Canadian central banks had already surprised with interest rate increases. Looking at the Fed, it is uncertain whether it will pause interest rates.
“Actually, the US Federal Reserve should raise interest rates because financing conditions are very easy thanks to strong equity markets and low corporate bond spreads, the labor market is strong and core inflation is still far too high,” commented Edgar Walk, chief economist at Metzler Asset Management.
Fed meeting on Wednesday
However, the Fed will probably take a break from interest rates at its meeting on Wednesday, since the data situation has been rather contradictory recently. But it should bring up the possibility of a rate hike in July, Walk added.
US consumer prices for May will be published on Tuesday, before the Fed’s interest rate decision. US inflation fell to 4.9 percent in April. Details on inflation in the euro zone in May are on Friday’s agenda. According to initial estimates, the annual rate fell to 6.1 percent from 7.0 percent in the previous month.
On this basis, the analysts expect the ECB to raise further interest rates in any case. “In Europe, the European Central Bank will probably make two more adjustments,” wrote Ulrich Kater, chief economist at Dekabank. But then the interest rate screw would be tightened enough to get inflation under control in the coming quarters.
Hype about artificial intelligence
Various economic data over the course of the week paint a more precise picture of the economic situation in Europe and Germany: the ZEW economic expectations for June will be published on Tuesday, and figures on industrial production in the euro zone in April will be available on Wednesday.
German industry was able to expand production slightly in April, but landed fewer new orders. “Incoming orders have recently been disappointing and pessimism in the industry has continued to grow,” summed up the experts at Helaba.
On the corporate side, things should continue to be quieter. In the wake of the hype surrounding artificial intelligence, technology stocks in particular have recently been the focus of global attention. Some price capers could come to investors next Friday. Futures contracts on stocks and indices on the futures exchanges expire on the major expiry date. Share prices and indices can then fluctuate noticeably even without significant company or economic news.