Stock Market's Hot Phase: Exciting Week Ahead
Hey there! The stock market's 'hot phase' is in full swing, and the week ahead is shaping up to be quite thrilling. After a significant surge in November, the DAX has reached new highs. But is the rally set to continue or will it take a breather? Let's dive into the details.
Central banks at the forefront
The focus is on the upcoming meetings of major central banks – the US Federal Reserve (Fed) and the European Central Bank (ECB). Most market players are betting on an interest rate pause from both institutions, craving some monetary policy easing. However, the question remains: will these fantasies be encouraged or dashed by the central banks?
Awaiting the job report and inflation rates
The US labor market report and inflation figures are due this week. Expert opinions are divided. Some suggest that the comparatively strong job growth is primarily due to cyclical jobs and people returning from strikes. The trend, they say, still points to a weakening economy in the fourth quarter. While others believe this could postpone the predicted first interest rate cut, leading to new DAX records.
Will the ECB make its first rate cut in April?
Chief economist Edgar Walk from Bankhaus Metzler expects the ECB to cut its key interest rate for the first time in April, while the Fed might not lower its rates until June. The reason behind this prediction is the perceived weaker economic situation in the eurozone and faster core inflation fall in the eurozone versus the USA.
Skepticism and caution prevail
Despite the optimist's views, several analysts are skeptical about the price gains in the capital market, comparing them to premature Christmas presents. They worry about potential market corrections, especially in light of recent statements by ECB President Lagarde, which seem to indicate a willingness to take further restrictive measures if necessary.
On the corporate side, a relatively quiet week awaits
There is not much corporate news expected for the week. Medical technology manufacturer Carl Zeiss Meditec will publish its annual figures, and engineering services provider Bertrandt will release its reports. The fashion sector will also provide updates, with Inditex reporting its results for the first nine months and H&M sharing its sales figures for the fourth quarter.
Additional Insights
Expected interest rate decisions by the ECB and the Fed are poised to impact the stock market. While the Fed may maintain the target range for the federal funds rate, the ECB is reportedly planning to lower its key interest rates by 25 basis points. Despite these decisions, market volatility could remain high due to ongoing tariff concerns and other uncertainties. The technical outlook for EUR/USD and USD/JPY suggests continued volatility with potential support and resistance levels [Source: Banktracker].
