Dusseldorf Despite all the burdens such as rising interest rates and the threat of recession, the most important indices rose at the beginning of the week. The US leading index S&P 500 recently recorded an increase of 3.7 percent. “The USA is the largest economic power with the world’s largest capital market,” says Handelsblatt financial editor Andreas Neuhaus in the podcast Handelsblatt Today. US stock exchanges usually set the direction for all other markets. However, prices have been falling again since Tuesday.
For many investors, the question arises as to when prices will bottom out. That, however, “can only be answered in retrospect,” says Neuhaus. Nevertheless, there are signs that can provide orientation.
For example, Bank of America identifies ten indicators that have historically pointed to an end to the descent. Finance editor Neuhaus talks to host Lena Jesberg about the ten indicators and their importance. At least eight of the ten indicators had to be correct in the past “so that one can hope for an end to the bear market,” according to Neuhaus.
One indicator that has already been met is the rising unemployment rate in the USA. Another is the low in the ISM Manufacturing Purchasing Managers’ Index (ISM PMI Index), which is considered the key leading indicator of US economic activity. This fell by 7.1 points compared to the previous year. The ISM PMI index is currently at 52.8 points. Values above 50 indicate an increase in production, values below 50 indicate a decrease in production. “The fundamentally more pessimistic mood among investors is also considered a fulfilled factor,” says Neuhaus.
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The fourth indicator already met is the rise in the S&P 500, which has risen by 5 percent at least once in the past three months. “However, this sign is a relatively weak indicator – short-term reversals are not uncommon in a bear market,” says the finance editor.
>> Read here: It’s all about these ten indicators
The most important sign, however, would be if the US Federal Reserve lowered the level of interest rates in the US at its next meeting on September 21, Neuhaus said. “At the moment, however, the expectation that the monetary watchdogs will raise the key interest rate by 75 basis points instead of lowering is dominating the markets.”
In the podcast, the financial editor explains which other indicators are important and why they are so heavily dependent on the development of interest rates and inflation.
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