As if they had known that the inflation data from the USA on Tuesday would almost turn the stock market world upside down. Investors on Wall Street and in Frankfurt were euphoric about the 0.1 percentage point drop in the overall and core rate, causing a fireworks display in the indices. The last 1.2 percentage points to the inflation target should not force the Fed to make a further interest rate hike, on the contrary: the first interest rate cut is likely to take place next summer and the stock market is now open to speculation.
DAX Clears the 200-day Line
This also signalled the start of the year-end rally in the DAX, which cleared the 200-day line with impressive ease this week and thus also switched the last stock market traffic light to dark green. After the 1,300-point rally in just three weeks, there is much to be said in favour of a breather, but many investors are still sitting on capital, so this could be delayed for some time and a few hundred points. Although the economic situation has not changed fundamentally and the geopolitical risks have not diminished since the end of October, the sudden change in sentiment was triggered solely by monetary policy and thus by the overriding factor of liquidity, which is now once again driving the sceptics of the rally forward.
“Never fight the Fed”
The all-important question, however, is who will ultimately emerge victorious in this rather unequal duel: the market, which does not believe in further interest rate hikes and is already considering interest rate cuts next year, or the central bank, which at least verbally remains true to its restrictive line and wants to prevent an easing of financing conditions for all the world. Investors should therefore not be too euphoric or too quick to take risks. Going against the Fed has usually not been the right strategy in the past.
Siemens With A Dream Finale To The Reporting Season
The German reporting season is over, and with a bang. Siemens was the last DAX company to present its figures and more than convinced investors. On the bottom line, the Group earned 8.5 billion euros in the past financial year, almost twice as much as a year earlier. Shareholders are also set to benefit from this, with an increase in the dividend from 4.25 to 4.70 euros. The dream scenario for investors is rounded off by a further share buyback in total six billion euros over the next five years. A mix of news that not only pushed Siemens shares up by more than five per cent, but also the DAX.
Chinese Apparently Go On a Shopping Spree Again
The Chinese are once again flirting with European and German gems. The share price of Mediamarkt and Saturn parent company Ceconomy rose by 25 per cent at its peak this week, but then fell again slightly. According to media reports, China’s online giant JD.com is in talks with the major shareholders. Due to the complex shareholder structure at Ceconomy, the talks could either take a long time or be very quick if everyone is on board.
There is now also plenty of speculation about the amount of a takeover bid that would be required if the 30 per cent threshold is exceeded by the remaining shareholders. This may therefore be an attractive investment opportunity not only in the case of Ceconomy, but also with a view to other takeover candidates should China’s shopping spree in Europe continue.
What Will Happen in the Coming Week?
Not too much on the data front at least, if you take a look at the diary. Purchasing managers’ indices from Germany and the eurozone on Thursday and the ifo index on Friday are the highlights. The publication of the minutes of the last Fed meeting on Wednesday evening could also have been interesting. However, after the consumer and producer price data, which also came in weaker than expected, one could be forgiven for thinking that nothing is as old as yesterday’s newspaper.
Jürgen Molnar started his trading career after his banking education as a trader at the Frankfurt Stock Exchange. After a few years he founded his own securities trading bank and was with this also on the floor trading of the Frankfurt Stock Exchange. Jürgen has always been a trader himself and focuses on the markets he has been trading for years, German stocks and the DAX benchmark index.