"Still a lot of room for improvement": A course rally before Christmas is possible

Sunday, December 06, 2020

"Still a lot of room for improvement"
Course rally before Christmas is possible

In November, the Dax had the best month in its history. The hope for the corona vaccines and further economic aid could provide a new tailwind in the coming week. However, the short time for Brexit agreement is making investors nervous.

According to experts, equity investors can look forward to further price gains in the run-up to Christmas. "There is still a lot of room for improvement after Biontech and Pfizer received the first approval for their coronavirus vaccine," said Naeem Aslam, chief market analyst at brokerage firm AvaTrade.

His colleague Jochen Stanzl from the online broker CMC Markets urges caution because of the widespread optimism. "If expectations get too optimistic, this shot can backfire." In addition, the current strength of the euro is a problem. It reduces the competitiveness of goods from domestic companies on the world market. At just under $ 1.22, the common currency is currently as expensive as it was three years ago.

Tailwind expected from central banks

In the current week, the Dax first took a break on its recovery course after it had posted the best November in its history. It gave way for the first time in about a month on a weekly basis, but was most recently at around 13,300 points, but still reached its record high from February. Larger setbacks are not to be expected, says analyst Timo Emden from Emden Research. "Rising virus numbers and the associated lockdown scenarios have long ceased to scare investors." In addition to corona vaccines, investors could also rely on further economic aid from central banks.

The hope for the latter could be on Thursday meet when the European Central Bank (ECB) advises on its monetary policy. Commerzbank analyst Michael Schubert predicts that securities purchases will be extended until at least the end of 2021 and that the volume will increase by 600 billion euros. He also expects more cheap loans for commercial banks.

Less than a week after the ECB, the US Federal Reserve (Fed) announce additional economic stimulus. Fed chairman Jerome Powell made this clear at his most recent hearing in the US Congress, says AvaTrade expert Aslam.

Brexit drama before the last act

Stockbrokers also pay close attention to negotiations on future ones UK-EU relationsafter an insider said a deal was within reach. "It is no longer five to twelve, it is a minute to twelve," warns portfolio manager Thomas Altmann from QC Partners. With each passing day, the risk of failure that would catch the stock markets grows. Without a trade agreement, there is a threat of mutual tariffs at the turn of the year with a negative impact on the economy on both sides of the English Channel.

Stock exchange traders expect little impetus for the overall market from the upcoming economic data. Make the start on Monday the numbers for German industrial production. The sustained recovery in manufacturing will hardly make up for the losses in the service sector, say stockbrokers.

From ZEW index at the Tuesday Investors hope for an answer to the question of how the successes in the development of a coronavirus vaccine are reflected in the mood of German stock market professionals.

Only a few companies present business figures so shortly before Christmas. In the US, the "Photoshop" provider open Adobe and the SAP rival Oracle their books.