Key figures on the mood of stock investors are now regularly sending buy signals, so that the stock markets now and again have opportunities for short-term stabilization. However, stock market history shows that sentiment indicators lose signal strength in an environment with restrictive monetary policy and an inverted US yield curve. Our forecasts that the US Federal Reserve will raise its key interest rate to 5.0 percent and the ECB its deposit rate to 3.0 percent further cloud the medium-term outlook for the stock markets. We therefore continue to see the risk that the DAX will fall towards 11,500 index points in the coming months.
Indicators of investor sentiment show growing pessimism on the stock markets. In the weekly survey of US private investors by the American Association of Individual Investors (AAII), for example, only 20 percent were in the positive bull camp, while 50 percent of investors were in the negative bear camp (see chart 1).