Dusseldorf On the last trading day of the year, the Dax treads on the spot. The German leading index listed on Thursday in the first hour of trading 0.1 percent plus at 15,860 points.
The fear of Omikron caused a setback in the Dax at the end of November. In the meantime, he has recovered from the shock and, like immediately before the appearance of the new coronavirus variant, is around 16 percent above the level at the beginning of January. This is the ninth time in ten years that he has made an annual profit.
With that, the Frankfurt stock market barometer had a small year-end rally after all. On December 20, it had dropped to 15,060, but as so often in this year, this setback was a buy-signal. Within six trading days it went up by almost 900 points or six percent, with the index recapturing the technically important 200-day line and closing several price gaps – each a sign of strength.
By taking profits on Wednesday, the Dax fell back into the 15,800 to 15,850 point range. Such a setback is a normal development after high price gains in a short period of time.
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The area above 15,800 points was, so to speak, the lid for the price development of the Dax in the previous month. In rising above this level around the Christmas holidays, that resistance has become support. As long as the Dax defends this area, further price gains can be expected in the short term, explain the chart technicians of the major Swiss bank UBS.
For the coming year, investors will primarily watch the development of global inflation rates and the interest rate situation. Due to the high inflation, the US Federal Reserve has already initiated a turnaround in its monetary policy and is anticipating three rate hikes in the coming year.
Accordingly, experts also expect rising interest rates, which would also lead to rising yields on the relevant ten-year US government bonds – an important competitor for stocks. However, this situation is not new. “Over the past 30 years, the experts have forecast interest rates to rise 29 times on average,” Sven Lehmann, fund manager at HQ Trust, has calculated.
“Inflation is not the enemy of the stock markets, but their great friend”
Lehmann has analyzed the development of interest rates on ten-year US government bonds since 1992 and compared them with the estimates of the experts at the end of each year for the next year. The result: “In the 29 years in which interest rates should have increased, it was only eleven times that interest rates were higher at the end of the year than at the beginning of the year,” explains Lehmann.
In 16 out of 29 cases, the Philadelphia Fed even forecast higher interest rates for each quarter than the previous one. The predicted rise in interest rates from quarter to quarter only happened three times.
Look at individual values
Sartorius: At the top of the Dax, the shares of the laboratory supplier Sartorius gain around one percent in value. Sartorius will probably also make the race as the best DAX value for the full year 2021.
Erdogan’s monetary policy is causing credit costs to rise
The downside of Turkish President Recep Tayyip Erdogan’s policy of relying on falling interest rates despite high inflation is evident on the bond market. Since the central bank began to cut interest rates in September, the yield on ten-year government bonds has risen by more than seven percentage points, the financial service Bloomberg has calculated.
On Wednesday it hit a record high of 24.9 percent. This development shows that investors are concerned that monetary policy is too loose to contain inflation.
Erdogan is constantly exerting pressure on the central bank to further lower the key interest rate – in the past four months by 500 basis points to 14 percent. Contrary to popular economic theories, Erdogan is of the opinion that low interest rates dampen inflation and has already dismissed high-ranking central bankers who opposed his course several times.
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