Stock exchange in Frankfurt - Dax loses momentum after jumping above 17,000 points
The US Federal Reserve has fulfilled investors' hopes with its clear signal that it will probably cut interest rates three times in 2024. The DAX reacted positively and climbed above 17,000 points for the first time in its history.
The momentum slowed noticeably towards midday, with the leading German index still up 0.78% at 16,896.97 points. The gain in the year-end rally since the interim low in October thus amounts to 15.5 percent. The Dax is a so-called performance index. This means that company dividends are included in the calculation.
The key interest rate decision by the European Central Bank (ECB) in the afternoon, followed by a press conference with ECB chief Christine Lagarde, could have another significant impact on share prices.
The indices behind the Dax are doing even better. The MDax mid-cap index rose by 3.03% to 27,229.03 points. The second-line index SDax gained 3.27 percent to 13,501.59 points. The eurozone index EuroStoxx also rose by one percent.
The prospect of falling interest rates is good news for equity investors. Shares are becoming more attractive again compared to fixed-interest securities. Loans are becoming cheaper, companies can therefore finance themselves more easily and investments are becoming more affordable. In New York, investors had already reacted enthusiastically to the Fed's statements the previous day, with the Dow Jones Industrial reaching a record high.
Real estate shares reacted to the new interest rate prospects with high price gains. Vonovia, for example, climbed more than eight percent in the DAX, driven additionally by a buy recommendation from ING. The European real estate sector, the strongest in the Stoxx 600 sector overview, recorded an increase of almost six percent. Construction and real estate financing is becoming cheaper again as interest rates fall, which can boost demand on the housing market.
A report in the magazine "Der Spiegel" caused shares in DHL and Telekom to fall sharply by up to 2.9%. According to the magazine, the German government wants to finance the restructuring of Deutsche Bahn by selling shares in Telekom and DHL.
The traffic lights had to rethink after the budget ruling by the Federal Constitutional Court. The government now only wants to hold a strategic stake of 25 percent plus one share in Deutsche Telekom. It currently holds 30.34 percent. At DHL, on the other hand, the Ampel is planning to part with more shares, writes the magazine. The share of the federally owned KfW was last at 20.49 percent.
The engine manufacturer Deutz wants to take over some activities from the drive system and large engine manufacturer Rolls Royce Power Systems. The purchase price is expected to be in the high double-digit million euro range, according to reports. Deutz shares rose by 6.8 percent. The purchase price appears to be a bargain, said one trader.
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- Investors in Frankfurt's stock exchange are optimistic about the potential interest rate reductions from the US Central Bank, which could positively impact DHL, a prominent German company under the Dax index.
- The leading German index DAX, which includes shares like Deutsche Telekom, has been performing well, surpassing 17,000 points for the first time.
- The European Central Bank's key interest rate decision and subsequent press conference by ECB chief Christine Lagarde could significantly impact share prices beyond the DAX, including the MDAX and SDax indices.
- Germany's DAX, MDAX, SDax, and EuroStoxx indices all showed positive growth in response to the potential interest rate reduction, making shares more attractive than fixed-interest securities.
- The US Federal Reserve's clear signal about interest rate cuts prompted New York's Dow Jones Industrial Average to reach a record high, indicating a broad global impact on share prices.
- The French real estate company Vonovia, listed on the Frankfurt Stock Exchange, experienced significant gains following an interest rate proposal and a buy recommendation from ING, benefiting from the anticipated decline in mortgage rates.
Source: www.stern.de
