The Dax broke the 15,000 and 16,000 marks in March and August 2021, when stock exchanges worldwide left their Corona lows from the previous year behind them. Monetary policy is now providing an upswing.
The prospect of key interest rates falling significantly again soon catapulted the Dax above the round mark of 17,000 points for the first time on Thursday. The leading index climbed by 1.4 percent to 17,002 points, continuing its recent record hunt.
As part of its year-end rally from the low since October, the leading index had exceeded its four-month-old high in the previous week and then reached new record levels almost every day.
On Wednesday evening, the US central bank Fed kept its key interest rates stable. However, there are signs of interest rate cuts for next year, which are also expected on the market.
Investors’ interest rate hopes received a fresh boost from the US Federal Reserve the evening before. There will probably be around three interest rate cuts in 2024, with a total volume of 0.75 percentage points. At least that’s what the Fed’s new economic forecast suggests, which exceeds the market’s previous interest rate expectations.
“US Federal Reserve Chairman Jerome Powell played Santa Claus for the stock exchanges. Now the stock market investors expect ECB President Christine Lagarde to play Santa Claus,” commented portfolio manager Thomas Altmann from QC Partners. Interest rate cuts were the focus, at least in the question round. The first reduction for April is currently being priced in on the stock exchanges, says Altmann. “A lot will depend on whether Lagarde leaves it like that or whether she warns stock market investors against premature optimism.”
Since the start of the stock market rally, expectations of the Fed have risen significantly, after initially hoping for just one interest rate cut next year. According to Altmann, stock market investors are currently betting that the Fed will make further adjustments to its interest rate steps in 2024.
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.
The DAX broke the 15,000 and 16,000 marks in March and August 2021, when stock exchanges around the world left their Corona lows from the previous year behind them. At the beginning of the pandemic, the index fell to 8,255.65 points. Since then, the rate has more than doubled – even though the Russian war in Ukraine and record inflation caused severe blows to the economy.
The development also stands in contrast to the poor economic situation in Germany. However, stock investors often do not necessarily focus on the current situation, but rather on future profits. In addition, most of the 40 companies listed in the DAX are internationally positioned: the Federal Republic is just one market among many.
Source: Stern
