Sunday, September 19, 2021
Index reform with ten newcomers
Dax starts into a new era
In the coming week, German investors expect an enlarged and stricter rules for the following Dax – among other things. The US Federal Reserve, the ailing real estate giant China Evergrande and a German unicorn are also likely to influence stock market events.
A new era will dawn for the Dax on Monday: The select group of members of the first German stock exchange league will be expanded to 40 out of 30. The newcomers are facing stormy days with the trembling game around the Chinese real estate developer Evergrande, the final spurt before the federal elections and the interest rate decision of the US Federal Reserve.
Sports equipment supplier Puma, biotech company Qiagen and online fashion retailer Zalando will take their place in the leading German index on Monday. Deutsche Börse also tightened the rules for Dax membership. This is to prevent another scandal about a Dax member like the collapse of the payment service provider Wirecard.
Even if there is a breath of fresh air in the index with the newcomers, it is probably too early for further records and the jump over the magical mark of 16,000 points, according to the Helaba strategists. The economic risks of the delta variant of the corona virus are not yet off the table, which has been shown above all in the recently disappointing economic data from China. On Friday afternoon, the Dax stepped more or less on the spot at 15,570 points on a weekly basis.
When will the Fed turn the tap?
Another negative factor for the stock exchanges is the debt crisis at the real estate group China Evergrande. Equity and bond investors fear bankruptcy – there is even talk on the floor of whether Evergrande could become the Chinese Lehman Brothers. Shares have plummeted more than 85 percent since the beginning of the year. On Monday, however, the stock exchanges in China and Japan will remain closed for the time being due to the holiday.
Otherwise, the stock exchange week is dominated by the central banks with the highlight in the middle of the week, when the FOMC interest rate committee of the US Federal Reserve meets. In view of the economic recovery in the USA, the exit from crisis mode is imminent. Investors are wondering when exactly Fed Chairman Jerome Powell will give the signal to cut back the billion-dollar purchases of government bonds and mortgage securities. Powell will surely reiterate that he wants to start “later this year,” said Tiffany Wilding, portfolio manager and economist for the American economy with asset manager Pimco. “We have long assumed that the FOMC will announce its decision to scale back bond purchases at the December meeting, but we now believe that this could happen as early as November.”
After the long debate, a tapering decision on the financial markets should come as no surprise either way and the price fluctuations are therefore kept within limits, “says Helaba. negative exchange rate reactions at a later point in time would be quite conceivable. “The Bank of Japan will also decide on interest rates on Wednesday, while central bankers in Turkey and Great Britain will meet on Thursday.
Language learning app goes public
The stock exchange traders are also eagerly awaiting the outcome of the Bundestag election on September 26th. Should an alliance of red-red-green actually form in view of the SPD’s most recent catch-up, this should cause unrest in the markets, according to bankers. Above all, investors fear strong tax increases and stricter regulation, for example in the real estate sector. “For the stock exchange, the general election could primarily mean a phase of uncertainty,” predicts Robert Greil, chief strategist at Merck Finck. “Depending on the outcome of the election, the upcoming coalition negotiations are likely to be challenging and the talks will drag on.”
The purchasing managers’ indices on Thursday should show how the European economy is doing. The week then ends with the Ifo business climate index. “The increase in the number of infections is likely to also make the companies surveyed by the Ifo Institute look somewhat less optimistic about the future,” summarizes Commerzbank. In contrast to the previous months, the assessment of the current business situation is unlikely to be any more positive.
On Friday, the language learning provider Babbel dares to take the plunge onto the trading floor. Online programs have been in particular demand since the corona crisis, which forced schoolchildren and students to sit at home. The Berlin start-up Babbel, founded in 2007, is aiming for a valuation of up to 1.26 billion euros.