The flagship Dax index of the Frankfurt Stock Exchange crossed the 17,000 mark on Thursday, a new record, supported by the prospect of an end to interest rate hikes by the US Central Bank (Fed).
The German index hit 17,003.28 points shortly after opening at 0800 GMT, after the US central bank’s announcement a day earlier and ahead of Thursday’s ECB meeting, which is expected to extend the pause on rates.
The Dax then fell to just above 16,900 at 09:10 GMT.
Fed Chairman Jerome Powell appeared in front of the microphones last night as Santa Claus and left almost no wishes unfulfilled, notes Jrgen Molnar, an analyst at RoboMarkets.
Even though he was only hinting at three rate cuts for 2024, the simple fact that he said the word was a real bolt from the blue, he continued.
After the announcements, stock market fireworks began on Wednesday on Wall Street, with the Dow Jones gaining 1.40%, climbing above 37,000 points for the first time in its history.
On the Frankfurt Stock Exchange, the Dax has surged more than 16% since the end of October, all the more surprising as the German economy continues to pile up bad signals between gloomy indicators and a budget crisis.
But the markets only have in mind the end of the phase of aggressive rate hikes, and are therefore speculating on the moment of the first monetary easing in the Eurozone and rediscovering the appetite for risk.
On Thursday morning, real estate stocks – Vonovia +7.98%, LEG Immobilien +5.84% on MDax mid-caps – benefited from the prospect of lower borrowing costs to support the troubled sector.
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On the banking side, Commerzbank (-2.40%) is neglected, with investors taking their profits while the bank has so far benefited from high interest rates.
At the same time as the growth of the stock market, the insurance sector is burdened by a sharp drop in bond interest rates, Allianz and Munich Re are at the bottom of the Dax table.
Since January, the index, which includes flagship stocks SAP, Siemens and Deutsche Telekom, has posted a positive balance of almost 22%.