Thanks to the economic recovery in the People’s Republic, the leading index can cope with high inflation and rising interest rate expectations. But there is another side.
Construction site in Beijing
Columnist Andreas Neuhaus observes that China’s latest economic data is supporting the Dax.
(Foto: China News Service via Getty images / Max Brunnert)
Frankfurt Another stock market week has passed without the leading German index Dax starting the correction that many had been expecting. Since the Frankfurt stock exchange barometer is currently coping with poor inflation data and rising interest rate expectations, the question arises as to what could actually push prices down.
It is striking that the stock exchanges in Germany and the rest of Europe have been doing better than those in the USA since October. And this effect continues: Since the end of January, the Dax has risen by three percent, as has the Eurostoxx 50. The US leading index Dow Jones has fallen by two percent.
In the USA, the losses can be explained by rising interest rate expectations, which are reflected in rising yields on the bond market. Conversely, stock prices have fallen because bonds are becoming an alternative to stocks, and higher interest rates are also devaluing companies’ future profits and making current financing more expensive – dampening profits.
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