Given the difficult situation in the Middle East, investors are likely to continue to act cautiously on the German stock market in the new week. The Dax is weak and recently slipped back below the round mark of 15,000 points: On Friday it closed at its lowest level in seven months. At the close of trading, it recorded a loss of 1.64 percent with the lowest price of the day at 14,798.47 points. On a weekly basis it lost 2.6 percent.
“As long as the war rages in the Middle East and the risk of intervention by other states cannot be ruled out, investors will not want to burn their fingers with stocks,” wrote capital market strategist Jürgen Molnar from broker RoboMarkets.
It’s of little use at the moment that when you look at the calendar, the current time of year is more in favor of equity investments. From a seasonal perspective, the period from October to December is the best time of the year – but October itself was sometimes difficult, writes the Landesbank Baden-Württemberg (LBBW). Geopolitical risks dampened the recovery potential.
The reporting season, which is gathering pace in the USA and Europe, is likely to set the tone for the new week. From the Dax, Deutsche Bank, consumer goods manufacturer Beiersdorf, flavor producer Symrise and Porsche AG will report on the third quarter on Wednesday. On Thursday it will be the turn of Mercedes-Benz and Volkswagen and on Friday it will be the turn of the plastics company Covestro and the engine manufacturer MTU.
In the USA, attention is primarily focused on the technology sector with the quarterly figures from Microsoft and Google parent Alphabet on Tuesday, the Facebook group Meta in the middle of the week and Amazon and Intel on Thursday. So far this year it has been clearly ahead of the standard values, but has not been able to escape the overall market weakness since the middle of the month.
The most important economic date is the key interest rate decision by the European Central Bank (ECB) on Thursday. After the tenth increase in a row in September, which means the key interest rate is currently 4.5 percent, market participants are now largely expecting a break in interest rates. “Based on the recent decline in inflation in the euro zone, the ECB is unlikely to decide to raise key interest rates any further,” says Robert Greil, chief strategist at private bank Merck Finck. He expects that the central bank will emphasize the importance of incoming economic data, which increasingly points to a recession, given the increasing uncertainty – especially when it comes to energy prices as a result of the Middle East conflict.
Things are looking better for the economy in the United States. It is likely to have grown strongly in the third quarter, predicts Christoph Weil from Commerzbank. The gross domestic product (GDP) will be announced on Thursday.
On the economic side, consumer confidence in the Eurozone, which will be published on Monday, will also be of interest. Sentiment data from the service sector and industry in both Europe and the USA are on the agenda on Tuesday. In Germany, the Ifo index, the most important German economic barometer, will follow on Wednesday.
