Investors are adopting a cautious approach as December begins, following a strong November. The DAX index saw a slight decline, though experts anticipate potential price increases and a year-end rally. Positive trends in Asian markets and improving global growth are encouraging. Meanwhile, political tensions in France and ongoing developments in the arms industry are noteworthy. In corporate news, Stellantis’s CEO has resigned, and Lufthansa’s investment in ITA has been approved by the European Commission.
Market Overview: A Cautious Start to December
Following a robust performance in November and a strong week prior, investors are taking a more cautious stance as December unfolds. Experts remain optimistic, suggesting that further price increases are on the horizon.
The DAX index kicks off the new trading week with a slight decline of 0.2 percent, settling at 19,580 points. Last week, the German stock market benchmark saw a rise of 1.5 percent, bolstered by record highs in US indices like the Dow Jones and S&P 500. Notably, the DAX achieved a commendable monthly performance in November, climbing by 2.9 percent.
Hopes for a Year-End Rally
Market participants are now looking forward to potential price hikes and are banking on a year-end rally. Jochen Stanzl, a market analyst at CMC Markets, notes, “The technical prerequisites are in place.” He highlights that if the DAX maintains levels above 19,300 points, it could pave the way toward the key psychological threshold of 20,000 points. However, he warns that active participation from buyers is crucial to avoid any undesirable dips below 19,300 points.
Markus Reinwand, an equity strategist at Helaba, shares a similar sentiment, pointing to potential upward trends: “Declining key interest rates could create additional valuation space.” He also cites improving global growth along with profit outlooks as favorable indicators for continued gains. With the upcoming inauguration of US President Donald Trump on January 20, market dynamics could shift rapidly.
On Wall Street, traders are keenly anticipating speeches from US central bank officials, including Fed Chair Jerome Powell. Kyle Rodda from Capital.com emphasizes that two primary factors could influence market volatility this month: potential fiscal policy changes under Trump and the Federal Reserve’s monetary policy actions.
Global Market Movements and Economic Updates
Asian markets are off to a positive start this week, buoyed by enhanced sentiment in China’s manufacturing sector and relaxed foreign investment regulations. The CSI 300 index, which tracks major Chinese stocks, experienced a rise of 0.8 percent, building on last week’s gains. Similarly, Hong Kong’s Hang Seng index increased by 0.6 percent before the trading day concluded.
Japan’s Nikkei 225 index climbed by 0.8 percent, reaching 38,513 points, as it continues to hover between 38,000 and 40,000 points, a trend that has persisted since late September. After reaching a peak of 42,426 points in July, the index faced significant declines but is now on the mend, showing a year-on-year increase of approximately 15 percent.
In currency markets, the euro is slightly weaker against the US dollar, impacted by ongoing political turbulence in France. Marine Le Pen, leader of the Rassemblement National party, is exerting pressure on the conservative government over budgetary matters, threatening a no-confidence vote if her demands aren’t met. Upcoming days could prove pivotal for the French administration.
In the cryptocurrency realm, Bitcoin has started the week with minor losses, trading around $96,400 on the Bitstamp platform, remaining close to the significant $100,000 mark, which it has yet to surpass since its record high of $99,800 on November 22.
The arms industry continues to thrive, with the largest 100 companies generating $632 billion in revenue from military products and services in 2023, marking a 4.2 percent increase from the previous year. Rheinmetall, Germany’s largest arms manufacturer, reported a 10 percent revenue rise to $5.5 billion, largely due to heightened demand resulting from the ongoing conflict in Ukraine.
In corporate news, Carlos Tavares, CEO of Stellantis, parent company of Opel, has stepped down. The board has accepted his resignation, and a successor is expected to be appointed in the first half of 2025. Meanwhile, Stellantis has reiterated its recently adjusted business outlook for the year, amidst challenges faced by the automaker.
In a significant development, the European Commission has approved Lufthansa’s participation in the state-owned Italian airline ITA, allowing the German airline to proceed with its investment while ensuring that certain flight routes remain available to competitors such as EasyJet and Air France-KLM.