Saturday 24th October 2020
In the USA, the reporting season that is already underway has kept the stock market on track with positive impulses. Will this also be possible in Germany from next week? In addition, the US election and the Corona crisis are also keeping investors on their toes.
From the perspective of stock exchange traders, the sluggishness on the German stock market could continue. The uncertainty about the outcome of the US presidential election and the rising number of corona infections are keeping investors in suspense. The German leading index Dax has been disoriented for weeks and recently fluctuated between 12,500 and 13,000 points. In the coming week, the reporting season will also pick up speed in this country. It remains to be seen whether it can provide noticeable price impulses.
After a weak week, the German stock market entered a final spurt on Friday. The Dax went out of trading in the evening with a plus of 0.82 percent to 12,645.75 points. The weekly balance for the Dax amounts to a minus of around 2 percent. October is actually considered a strong stock market month – but there is great uncertainty. For the experts at Landesbank Baden-Württemberg (LBBW), many factors are responsible for this: The cocktail of exploding new corona infections, the first new “real” lockdowns, an impending hard Brexit, hardly any improvement in economic data and setbacks in the development of a corona Vaccine.
The LBBW authors attribute the fact that only the US stock exchanges have so far remained comparatively stable to the reporting season that is already underway there. “Despite the US corona peak in August, the figures reported by the US blue chips for the third quarter of 2020 are so far convincing overall.” In this country, the reporting season is only just beginning. There had already been some positive surprises, so the bar for the market could be raised. Most recently, the car manufacturer Daimler had pleased investors with a raised profit outlook for 2020.
According to many observers, the focus is already on the new year, as 2020 has been ticked off due to Corona. Deka chief economist Ulrich Kater is convinced that the market is expecting an improvement in the coming year despite the setbacks in the economic recovery.
Disagreement at the ECB?
Investors will find out on Monday how the past quarter of the year at the software company SAP went. The series of numbers in the Dax continues on Tuesday with the plastics group Covestro. The reports from Deutsche Bank, BASF, Beiersdorf (sales figures) and the food delivery service Delivery Hero will follow on Wednesday. On Thursday the car manufacturer Volkswagen, the engine manufacturer MTU and the clinic and medical group Fresenius as well as its dialysis subsidiary FMC will open the books. In addition, there is an abundance of numbers from the back row of exchanges for the entire week.
There are also some economic data to consider. The Ifo business climate will provide information about the corporate mood in this country on Monday. For the euro zone, the economic confidence for October will be published on Thursday – the European Central Bank (ECB) will make an interest rate decision on the same day. Although the European monetary authorities had indicated their general willingness to expand the monetary policy stimuli, there are probably different views within the ECB about when.
In the short term, the US election is still in focus. Although there is a possibility of Donald Trump’s victory, a change of government is currently being priced in on the capital markets, says Carsten Mumm, chief economist at the private bank Donner & Reuschel.