DAX Outlook: Stock Markets Await More Hectic Weeks
12 / 04 / 22
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According to stock market strategists, the German stock market should remain uncomfortable due to the shortened trading week leading up to the Easter holidays. “With the war between Russia and Ukraine going on for two months now, expectations are growing for further economic slowdowns and rising inflation,” said Luca Paolini, chief strategist at Pictet Asset Management.
"While growth in many countries remains above the trend, we see downside risks to corporate earnings." The Dax lost more than one percent last week, hitting 14,246 points on Friday afternoon. Since the beginning of the year, it has fallen by a good eleven percent.
The ever-increasing rate of inflation and the change in interest rates initiated by the US Federal Reserve create problems for investors. “The big question will be whether the U.S. Federal Reserve succeeds in securing a soft landing for the economy with its interest rate policy,” says MM economist Karsten Klud. Warburg. Basic conditions worsened with Russia's attack on Ukraine. “So the central bank may be forced to raise interest rates more than currently expected to bring inflation back under control – and this at the same time that growth prospects are deteriorating.” Accordingly, stockbrokers will keep a close eye on new sanctions against Russia.
WHAT IS THE ECB DOING?
The European Central Bank, which is meeting its board on Thursday, is also showing a growing willingness to raise interest rates. However, this opinion of many board members is based on the expectation that the economy will continue to grow despite significantly higher energy prices, said economist Michael Schubert of Commerzbank. However, in the event of a complete boycott of Russian energy supplies, a recession would probably be inevitable.
According to economist Katherine Neiss of PGIM Fixed Income, the prospect of higher and more sustained increases in energy prices will fuel inflation as well as put pressure on households and businesses. “Given the volatile and challenging environment, we expect the ECB to keep its options open and reiterate its relatively dovish stance announced in December on phasing out asset purchases later this year.”
As for the economy, on Tuesday's agenda are ZEW's economic expectations for Germany. The barometer for the next six months fell 93.6 points to minus 39.3 in March and thus more sharply than ever before. The current economic assessments of Germany's leading economic research institutes will be published on Wednesday. From the US, this week includes consumer prices (Tuesday) and retail sales (Thursday) for March. On Good Friday and Easter Monday, stock exchanges in Germany are closed due to public holidays.
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