Börse Express – Börse Frankfurt-News: US inflation makes courses (weekly outlook)

FRANKFURT (DEUTSCHE-BOERSE AG) – A solid US labor market report is giving tailwind to the stock markets. Courses are mostly going up. US inflation expectations are high.

January 9, 2023. Frankfurt (Frankfurt Stock Exchange). After a successful start to the year on the German stock market, the focus of the second week of trading is on the reporting season and US inflation data. The upward movement is likely to continue on Monday. At around 8 a.m., the DAX is at 14,690 points – that’s an increase of 0.4 percent. In Asia, the Hang Seng gained 1.8 percent and the Shanghai Composite 0.7 percent. In Japan, the stock exchanges are closed for a public holiday.

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The DAX gained 4.9 percent on the first five trading days of the new year, outperforming the US stock exchanges with growth of 1.7 percent in the S&P 500 and 1.5 percent in the Dow Jones. However, this only intervened on Tuesday – Wall Street was still closed on Monday. After the first hours of trading, the DAX is slightly up today at 14,640 points.

New dividend record in sight

Despite old problems in the new year, the 40 DAX companies are expected to pay out a record amount of dividends. “The DAX companies will have more money than ever before in 2022,” analyzes DekaBank. Higher costs were passed on through higher prices. In this way, almost 55 billion euros in dividends could be distributed – almost four billion more than in 2022 for the 2021 financial year.

Positive momentum on signs of an end to rate hikes

Tight markets and falling energy and gas prices have favored the start of the year, reports Martin Roth from Commerzbank. Now it’s up to the companies and the central banks: “Now it’s getting more difficult, because the approaching recession and the declared intention of the central banks to fight inflation further mean headwind.” After all, the companies are doing quite well in this environment, and the valuations have also come down significantly in some cases. “After a volatile start, we expect positive momentum as the end of the rate hike cycle becomes clearer.”

US inflation makes courses

The economic highlight are the consumer prices in the USA on Thursday. They had recently risen less sharply, which reduced expectations of further interest rate hikes and was positively received by the capital markets. “The price level could even have fallen slightly compared to the previous month due to falling petrol and used car prices; compared to the previous year there is a decline to 6.4 percent, well below the June high of 9.1 percent,” Roth expects. For the core rate, that would mean a further (too) high 5.6 percent compared to the previous year, but the trend is right.

“Nevertheless, the Fed will add more, perhaps even more than currently expected,” comments Christian Apelt from Helaba. The inflation figures could give a signal for this. “This in turn depends on whether the recovery on the stock markets, which faltered in December, can pick up speed again.”

His colleague Patrick Franke sees two possibilities here for the coming months: Either the economy cools down and unemployment rises, this is Helaba’s base scenario, which would allow the Fed to switch to a wait-and-see attitude soon. According to the forecast for the high point of the federal funds rate, the bank has again slightly raised it. “The key interest rate corridor should reach a peak of 4.75 to 5 percent in March.” Or it took longer before monetary policy left noticeable signs of slowing down and continued unacceptably high inflation forced the central bank to go well over 5 percent.

Important business and economic dates of the week

Earnings season starts this week in the US. Traditionally, the US banks JP Morgan, Wells Fargo, Bank of America and Citigroup are the first to report on the past quarter. BlackRock also takes stock.

Monday, January 9, 2023

8:00 a.m. Germany: Industrial production, November

DekaBank expects growth. “In view of the enormous current burdens, this is sensationally good news.” The German economy has been doing surprisingly well so far. “Industrial production made a positive contribution to this in November, although the energy-intensive sectors probably continued to weigh on development.”

Thursday, January 12, 2023

2:30 p.m. US: consumer prices, December

US consumer price inflation will have continued to fall. DekaBank assumes that. “The development of energy prices played the main role here.” At a good 6 percent, their annual inflation rate is likely to have fallen into the single digits for the first time since February 2021. On the other hand, a slight increase can be reported for food. “In the definition excluding food and energy, we also expect the inflation rate to fall.” Rental inflation has not yet reached its zenith. But the easing of the supply chain problem is likely to have caused further price declines in some sub-areas.

Friday January 13, 2023

10:00 a.m. Germany: Gross Domestic Product 2022

According to DekaBank, the economy has grown by 1.9 percent. “While the increase we are forecasting seems strong, it is disappointing compared to what was hoped for.” A certain degree of caution is advisable with regard to the provisional estimates by Destatis, especially for the fourth quarter, because many indicators are still unknown and those that have already been published have surprisingly often surprised.

4 p.m. US: University of Michigan Consumer Confidence, January

Consensus is a slight recovery from 59.7 to 60.5. According to Commerzbank, this is still an extremely low level in history.

by Antje Erhard, January 9, 2023, © Deutsche Börse AG

(Deutsche Börse AG is solely responsible for the content of the column. The articles are not an invitation to buy or sell securities or other assets.)

AXC0084 2023-01-09/10:14

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