After the DAX reached a record high shortly before the end of the 2023 stock market year, the new year could start as quietly as the old one ended. Experience has shown that many market players will only return to trading venues in the second or third week of January.
On Friday, after a shortened trading day, the leading German index closed with a moderate increase of 0.30 percent to 16,752 points. This meant it remained close to its record high, which was reached in mid-December at just over 17,000 points.
Possible interest rate cuts are fueling year-end rallies
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 returns from their vacation in the new year, there will be a reality check for the year-end rallies on the stock and bond markets,” wrote analyst Thomas Altmann from QC Partners. Then it will have to be seen how much risk the stock market investors are taking at the start of the year and whether they are prepared to invest larger sums at the current price levels.
Stock prices in November and December were driven primarily by the scenario of key interest rates falling again, especially in the USA. That’s why investors should take a look at the minutes of the most recent meeting of the US Federal Reserve on Wednesday evening.
At the meeting in mid-December, the Fed promised interest rate cuts next year. Many observers are already expecting a rate cut at the Fed meeting in March. The markets will therefore closely analyze the wording of the protocol for clues about future monetary policy.
With a view to the German stock market, it will be interesting to see whether the favorites of the old year continue to enjoy the favor of investors in the new year or whether investors change horses.
Winner and Loser
The biggest price winners in the Dax in 2023 were Rheinmetall, Heidelberg Materials, Adidas, SAP and Covestro – the latter driven primarily by takeover hopes given the interest of the oil company Adnoc. This faces the losers Zalando, Siemens Energy and Bayer.
Most major stock exchanges are closed on New Year’s Day. However, trading takes place in China, Japan and Russia.
