The Dax has risen faster in recent weeks than it has in decades. A correspondingly rapid recovery of the economy from the corona crisis is anything but certain. Experts warn investors against setbacks. In addition, the Dax must say goodbye to a founding member.
Is the disillusionment coming after the recent stock rally on the world markets? At least the risk of a setback is currently growing. The Dax already delivered a first taste on its last trading day in May. Experts warn of the carelessness with which investors again got around the world after the corona crash. Because there are enough uncertainties. After five trading days in positive territory, the Dax recorded losses for the first time on Friday. After some ups and downs in the course of trading, the leading German index closed at a discount of 1.65 percent at 11,586.85 points.
Since the March low, the leading German index has now caught up by around 40 percent. According to the Landesbank Baden-Württemberg (LBBW), the market has not seen such a rally since the turn of the millennium.
According to experts, the recent hopes on the stock markets for a rapid recovery in the global economy could evaporate quickly. The decisive factor is the development of China, which was the first country to be hit by the coronavirus pandemic and the first country to start up its economy again, says Martin Lück, chief investment strategist for Germany, Austria and Eastern Europe at the world’s largest asset manager Blackrock. If the upswing stalls despite the command economy there, that would be a sobering realization for the West. “It would mean that there is still a long way to go to normality, which optimistic equity investors are already pricing in these days.”
Another risk factor is growing tensions with the United States over the Chinese security law for Hong Kong, warns market analyst Milan Cutkovic from brokerage firm AxiTrader. “This could also threaten the trade deal and fuel the fear of a new version of the trade conflict in the past two years.”
Promotion candidate Deutsche Wohnen
The peak in economic data awaits on Friday: the US labor market data. The figures from the private employment agency ADP on Wednesday provide a foretaste. On Monday and Wednesday, it is the turn of the barometers for the mood of purchasing managers in the US industry and the service sector, the so-called ISM indices. “While unemployment has continued to increase, we expect the ISM indices to stabilize somewhat,” says Commerzbank economist Christoph Balz.
On this side of the Atlantic, German and European purchasing manager indices are on the schedule on Monday as well as European retail sales on Thursday. The incoming orders of German industry follow at the end of the week. A decline of 20 percent must be expected here in April, after a decline of more than 15 percent in the previous month, says Commerzbank expert Balz.
In addition, stock marketers are eagerly awaiting the results of the monetary policy consultations by the European Central Bank on Thursday. A rate cut is considered to be excluded. However, pressure is increasing on the ECB to expand its bond purchases, says Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank. “First, the conflict over an EU reconstruction fund shows that the main burden of fighting the crisis remains with the ECB.” In addition, the previous volume of 750 billion euros would probably be exhausted in September.
Deutsche Börse will also review the composition of its indices on Thursday. LBBW analyst Uwe Streich predicts that she will probably announce the departure of Dax founding member Lufthansa from the first German stock exchange league. The real estate group Deutsche Wohnen will probably take the place of the airline.
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