Frankfurt The German stock market was able to maintain its high level at the end of the week, but was lacking in momentum overall. Driven by the latest US economic data and positive indications from the Asian markets, the leading German index ended the trading week 0.5 percent higher at 15,808 points. On a weekly basis, it increased by 1.3 percent.
The strongest Dax value is Vonovia with a gain of over three percent. The major German banks Deutsche Bank and Commerzbank are also in demand, benefiting from the positive mood in the US banking sector and increasing by 4.6 and 5.7 percent respectively.
Surprisingly good Chinese export data had previously made themselves felt in Friday business. In addition, the most recent US producer prices on Thursday, which were weaker than expected, also had an impact.
In contrast, the number of US jobless claims had exceeded the consensus. This strengthens hopes that the US Federal Reserve’s rate hikes will end soon as the effects of monetary tightening become noticeable.
The medium-term trend is more important than the daily trend. The Dax left the October low at 11,976 points far behind. Instead, the leading index is close to the historic high of 16,272 points, reached in January last year.
Look at the quarterly numbers
In the coming weeks, investors will be concentrating on the season of quarterly figures that is just beginning, which started in the USA on Friday with the good figures, especially from JP Morgan, Wells Fargo and Citigroup. The banks traditionally dominate the beginning of this period.
From the financial sector, State Street, Bank of America, Morgan Stanley, and American Express will follow in the coming week, from other sectors Alcoa, Netflix, Procter & Gamble and Tesla, among others. In Germany, Sartorius and SAP present their figures.
Beyond the current company data and outlook, the analysts deal with the overall market situation. According to Stefan Breitner, market technology is currently supporting the stock exchanges. The head of research and portfolio management at asset manager DJE Kapital judges: “Investors are not too optimistic, and the seasonal rhythm gives tailwind.” In addition, the probability of another interest rate hike in the USA has fallen.
But he qualifies: “In addition, there are warning signals, for example a shrinking money supply and poorer lending by banks.” With this assessment, DJE Kapital expects a better first half of the year on the stock exchanges and a more difficult second half of the year. With higher interest rates, bonds continue to be attractive.
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Other experts are also concerned about the declining lending in the USA, but they draw different conclusions. Thomas Grüner from Grüner Fisher Investments also attributes the declining numbers to technical influences from the Corona period. Therefore, he is not worried about the stock markets.
Justin White from the large US asset manager T. Rowe Price sees the situation differently. The current banking crisis will pass, but the shock is likely to have consequences. Regional banks are an important source of liquidity for small and medium-sized companies: “And the instinct of self-preservation means that these banks will be more reluctant to lend.” This would put a strain on economic growth.
Regional banks are a risk
The analysts at Bankhaus Metzler strengthen this argument. In her opinion, the regional banks remain vulnerable: “A look at the regional bank index reveals that it is still much too early to give the all-clear signal, because the currently much-noticed index is still almost 35 percent in the red compared to the February high.”
Similarly, White judges T. Rowe Price because of his skeptical economic outlook: “Corporate profits are likely to remain under pressure.” Many US corporations had either already reported falling earnings at the beginning of the year or were threatened by them. On the other hand, after the interest rate hikes, yields of almost five percent could be earned with risk-free government bonds. In comparison, investments in US stocks are “completely unattractive”.
With a view to corporate profits, Manfred Bucher from BayernLB expects tailwind for shares in the short term. The consensus forecasts for the year as a whole, both in the USA and in Europe, assume that profits will move sideways. However, the robust price developments of the past few weeks – despite the turbulence in the banks – were largely based on investors’ defensive expectations.
In the medium term, however, there is a risk for profit development. Bucher gives the reasons: an expected weak economy, higher input costs, higher financing costs, problems caused by the adjustment to globalization.
More: The well-known fund manager Jens Ehrhardt expects a setback in shares from May