FRANKFURT (dpa-AFX) – The Dax (DAX 40) should continue to find it difficult to break free from its grip in the last few days of February. Since the beginning of the month it has been moving in a 400-point range below 15,658 points. At the highest level for a year, the main obstacle to a further increase is the fear of interest rates, which has become more prevalent again.
The Dax has long since made up for the setback caused by the Russian invasion of Ukraine, but a hoped-for change in monetary policy remains out of sight. Market observer Robert Halver from Baader Bank therefore sees the leading index in a “stable lateral position”. In January it had increased by 8.7 percent, in February it has so far increased comparatively modestly – this is mainly due to the good start to the month. Since then there has been no progress.
According to Halver, investor sentiment is caught between a soft landing of the economy and fears of interest rates that have increased again. The latter were given fresh impetus on Friday by current inflation data from the USA. The so-called PCE deflator was slightly higher than experts had expected. Investors take this as a sign that high inflation is not abating and that the Fed remains under pressure to act.
The crux of the matter is that if the economy is doing well while consumer prices remain high, central banks have more room to maneuver in the fight against inflation. New inflation figures from Germany and the euro zone attracting looks that may not yet bring much relief.
According to Commerzbank, cheaper energy is likely to push the inflation rate in the euro area down from 8.6 to 8.1 percent in February. Robert Greil from the private bank Merck Finck doesn’t think a stronger fall in consumer prices is possible until March – but then also because of a base effect from energy prices, which jumped significantly after the start of the war a year ago.
“More important from the ECB’s point of view is that the core inflation rate remains at a high 5.3 percent,” says chief economist Jörg Krämer. This shows that inflation is still high. The core rate excludes fluctuations in energy and food prices.
As far as Russia’s war of aggression in Ukraine is concerned, according to the Baader expert Halver, “we’ve gotten used to it” on the financial markets. On the anniversary of the invasion, a solution to the conflict would mean “squaring the circle,” an insoluble task. “But as long as there are no serious escalations, such as China supplying arms to Russia, there will be no shocks on the financial markets,” believes Halver.
According to Carsten Mumm from the private bank Donner & Reuschel, the measures taken by the central banks will continue to point the way on the stock market for the time being. He believes that not only the US Federal Reserve but also the European currency watchdogs will remain on their restrictive course for the time being. In mid-March, he described a key interest rate hike by the ECB of 0.50 percentage points as “almost certain”.
Aside from the inflation figures, the focus in the new week should be on the ISM indices from the USA, which will be published on Wednesday and Friday – first for industry and later for the service sector. Economist James Knightley from the ING considers a correction of the sentiment indices possible, at least in part. Strong January numbers could therefore have been related primarily to relatively warm temperatures.
The reporting season will take its course in the coming days: Among other things, Bayer’s annual figures will be published on Tuesday. Beiersdorf will follow on Wednesday and Merck, among others, will be on the reporting season agenda on Thursday. This will be rounded off on Friday with results from Lufthansa.
In addition, the already known changes in the indices of the Dax family will take effect on Monday. After Linde’s withdrawal from the Frankfurt stock exchange, Commerzbank is once again a Dax member. The wind power plant manufacturer Nordex has moved up to the MDAX, with Deutsche Beteiligungs AG (Deutsche Beteiligungs) taking its place in the SDAX./tih/gl/he