Stock exchange - Record DAX faces reality check
After a record high for the DAX shortly before the end of the 2023 stock market year, the new year could start as quietly as the old one ended. Experience shows that many market players will not return to the trading venues until the second or third week of January.
After a shortened trading day, the German benchmark index closed on Friday with a moderate gain of 0.30% to 16,752 points. It thus remained close to its record high, which was reached in mid-December at just over 17,000 points.
Possible interest rate cuts fuel year-end rally
With a gain of around 20 percent, 2023 was the second-best year for the DAX in the past ten years. "As soon as everyone comes back from vacation in the new year, the reality check for the year-end rallies on the equity and bond markets is due," wrote analyst Thomas Altmann from QC Partners. We will then have to see how much risk stock market players are willing to take at the start of the year and whether they are prepared to invest larger sums at the current price levels.
Share prices in November and December were primarily driven by the scenario of falling key interest rates again, especially in the USA. Investors are therefore likely to take a look at the minutes of the Fed's latest meeting on Wednesday evening.
At the meeting in mid-December, the Fed held out the prospect of interest rate cuts in the coming year. Many observers are already expecting a rate cut at the Fed meeting in March. The markets will therefore be analyzing the wording of the minutes very closely for indications of future monetary policy.
With regard to the German stock market, it will be interesting to see whether the favorites of the old year will continue to enjoy the favor of investors in the new year or whether investors will change horses.
Winners and losers
The biggest price gainers in the Dax in 2023 were Rheinmetall, Heidelberg Materials, Adidas, SAP and Covestro - the latter driven primarily by takeover hopes in light of interest from oil company Adnoc. This contrasts with the losers Zalando, Siemens Energy and Bayer.
Most major stock exchanges are closed on New Year's Day. However, there is trading in China, Japan and Russia.
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- Despite the optimistic outlook of a potential interest rate cut influencing the stock market year 2024, analysts like Thomas Altmann from QC Partners warn of a reality check for the year-end rallies, especially in Germany's DAX.
- The Frankfurt Stock Exchange, home to the DAX index, experienced a record-breaking performance in 2023, with notable gainers like Rheinmetall, Heidelberg Materials, Adidas, SAP, and Covestro.
- As Frankfurt on the Main prepares for a new stock market year, many market players may adopt a more cautious approach, considering the willingness to take on risk and invest larger sums at current price levels.
- Observers anticipate that the Federal Reserve's minutes from their latest meeting, set to be published on Wednesday evening, will provide insights into future monetary policies that could impact the exchange rate and stock performance of major markets like Frankfurt and Germany.
Source: www.stern.de
