Despite growing pandemic concerns, the Dax could tackle the record level of 15,000 points in the new week. Because strategists do not see the soaring of European stocks as over yet. The domestic values have developed below average in the past few years compared to the USA, says fund manager Max Anderl from the asset management of the bank UBS.
“Investors should consider this a suitable entry point into European stocks.” Thanks to their economic sensitivity and the easing headwinds caused by Brexit, the companies are well positioned to benefit from the expected upturn.
In the past few days, the German benchmark index rose at times to a record high of 14,804.01 points, boosted by the prospect of an unchanged loose monetary policy by the Fed. With a plus of around one and a half percent, the Dax was also before the third weekly profit in a row. This is the longest series of the year so far.
However, investors were worried about the rising number of coronavirus infections, which made a renewed tightening of the pandemic restrictions more likely, said Martin Lück, chief investment strategist for Germany, Austria and Eastern Europe at the world’s largest asset manager Blackrock. The federal and state governments want to discuss this on Monday. “Nevertheless, equity investors are basically right if they look through the third wave,” added Lück. “In the second half of the year, economic activity should also report back in the service sectors that have been so badly shaken up to now.”
IFO AND GRP INDEX AT A GLANCE
When it comes to economic data, the attention of investors is directed, among other things, to the mood barometer of the German and European purchasing managers on Wednesday. Despite the increasing number of new infections, Commerzbank believes that these are unlikely to have changed in March. This is because the restrictive measures would primarily only affect individual sectors of the economy in which economic activity was already very low. On Friday it is the turn of the Ifo index, which reflects the mood on the German executive floors. The day before, the GfK index provides information about the buying mood of German consumers.
Meanwhile, the accounting season is slowly coming to an end. In the new week, among other things, the utility E.ON will present figures as well as numerous companies from the second and third series of exchanges. “Despite the economic recovery, the legacy of the corona pandemic weighs heavily,” said Commerzbank strategist Markus Wallner. Last year, for example, losses and depreciation had pushed the average equity ratio of DAX companies to 37 percent. This corresponds to the status of 2014. At the same time, the net debt of the companies continued to increase.
Investors are hoping for further statements on strategy and financial targets from the chemical company BASF on Friday at its capital market day. In addition, the latest index changes by Deutsche Börse will come into force at the start of the week. The energy technology group Siemens Energy will then move up to the top German stock exchange league, while “Nivea” manufacturer Beiersdorf will be relegated to the MDax small-cap index.
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