US news weighs on us: The German stock exchanges did not find a consistent direction last week. After a firmer start, which was mainly due to gains on the US stock exchanges and speculation about a further boost from the topic of artificial intelligence, the mood on the markets deteriorated noticeably in the middle of the week. This was triggered by reports about the plans of the upcoming US President Donald Trump to implement his announced import tariffs. At the end of the trading week, the US labor market report put additional pressure on prices. The labor market data, which was stronger than forecast, reduced the hopes of many market participants for further interest rate cuts by the US Federal Reserve. In combination with the announced higher tariffs, observers increasingly believed that a scenario with stagnating interest rates was likely. The expectation of interest rate cuts, which has been an important driver of stock market prices for some time, would therefore cease to exist.
Review: Further recovery
The Daxwhich had already exceeded the 20,000 point mark at the beginning of the week, still increased by 1.6 percent to 20,214.79 points compared to the previous week. The MDax However, it fell by 0.5 percent to 25,371.22 points. The TecDax gained 2.5 percent to 3,499.09 points.
The biggest weekly winners in the Dax were the titles from Sartorius with an increase of 8.3 percent, which was driven, among other things, by positive analyst comments. The course of Rheinmetall increased by 7.7 percent, with speculation about higher defense spending as a result of pressure from future US President Trump on NATO members providing impetus. In contrast, the titles from Zalando continued their recent downward trend and lost a further 10.5 percent, partly due to a negative analyst assessment.
Bonds: Significantly softened
Prices on the German bond markets fell noticeably last week. Increased inflation figures from the Eurozone and firmer economic data from the USA – and especially the US labor market report – reduced expectations of further interest rate cuts by the European Central Bank (ECB) and the Fed. This weighed on the prices of federal securities. In return, the yield on the ten-year federal bond rose from 2.42 to 2.59 percent in a weekly comparison. The current yield rose from 2.32 to 2.49 percent.
USA: Losses in the shortened trading week
The US stock exchanges recorded losses in the last trading week, which was shortened by the day of mourning for the late former President Jimmy Carter on Thursday. This was due to the significantly reduced hopes of interest rate cuts due to the unexpectedly strong US labor market report and the increased inflation expectations of US consumers. The Dow Jones Index fell 1.9 percent in a weekly comparison to 41,938.45 points. The broader S&P 500 also fell 1.9 percent to 5,827.04 points. The technology-heavy one Nasdaq-100 lost 2.2 percent to 20,847.58 points.
Outlook: Uncertainty before Trump takes office
Observers believe that the current week on the German stock exchanges could be just as turbulent as the last. Uncertainty over future US policy is likely to continue in the final week of trading before Donald Trump assumes his presidency on January 20, they say. Market participants are likely to be watching closely for information about the expected economic policy, and in particular the customs issue. At the same time, hopes of interest rate cuts in the USA could continue to decline, as higher tariffs could drive up inflation.
Regarding the future monetary policy The upcoming inflation figures from the USA and other economic data such as retail sales and the Fed’s Beige Book could provide additional arguments for or against interest rate reductions. Speculation about the ECB’s further action is also likely to receive impetus; the focus here will be on consumer prices and the minutes of the most recent ECB Council meeting, among other things.
Reporting season begins with major US banks
The influence of company news on stock market sentiment is likely to increase, as the reporting season begins in the USA. This is opened – with a view to the stock market heavyweights – by the major banks Bank of America, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo. Analysts predict positive impulses from the figures in advance, but the potential for disappointment is correspondingly high if the results and outlook disappoint expectations.
Selected important dates of the week
Tuesday, January 14th: Producer prices in the USA
Wednesday, January 15th: Wholesale prices in Germany; Industrial production in the Eurozone; consumer prices in the USA; US Federal Reserve Beige Book; New York Empire State Production Index (USA)
Thursday, January 16th: consumer prices in Germany; Summary of the last Council meeting of the European Central Bank; Eurozone trade balance; U.S. retail sales; Import and export prices in the USA; Philadelphia Fed Manufacturing Index (USA)
Friday, January 17th: Consumer prices in the Eurozone; Industrial production in the USA
Ulrich Kirstein is press spokesman for the gettex stock exchange. The business economist and art historian writes about literature and the stock market, interviews the head of market control every 14 days in Börse on Thursday and has spoken with Christine Bortenlänger, among others Stock market for dummies and Stocks for Dummies written.