US accounting season begins: stockbrokers expect new heights

Sunday 10th January 2021

US accounting season begins
Stockbrokers expect new heights

The beginning of the year gives hope: Allegedly, the price development of the first five trading days sets the direction for the year as a whole. For the Dax, this stock exchange rule applied in 70 percent of cases. There are several reasons for new heights.

Regardless of the latest course records, according to experts, the Dax still has room for improvement. "There are many reasons that stimulate the markets and give hope for even higher prices," says Christian Kahler, chief investment strategist for stocks at DZ Bank. "The end of the corona pandemic seems to be in sight – despite the initial difficulties with vaccinations in Europe. US President Donald Trump is about to leave, and a hard Brexit has been avoided."

The now determined victory of the Democrats in the US elections also forms a good basis for further price gains, says Norman Villamin, chief investor of the asset management of the private bank UBP. The party of the future US President Joe Biden had only secured a wafer-thin majority in the second Chamber of Congress through the by-elections for the Senate last week.

In a landslide victory, the signs would have been more towards redistribution, adds Villamin. "The planned fiscal expenditure would have been covered by an almost simultaneous increase in corporate and income taxes for private individuals with high incomes." Now additional aid packages to cushion the coronavirus consequences are the focus.

In the past few days, due to this speculation and the approval of another coronavirus vaccine, the Dax temporarily rose to a record high of 14,131.52 points and gained 2.5 percent on balance.

This plus can be interpreted as a good omen for 2021. According to a stock exchange rule, the price development on the first five trading days sets the direction for the year as a whole. For the Dax, this was the case in 70 percent of the cases in its more than 30-year history. Carsten Mumm, chief analyst at the private bank Donner & Reuschel, warns against excessive expectations. Much of the positive outlook for 2021 is already included in the courses.

Few economic data

When it comes to economic data, investors turn their attention to the USRetail sales on Friday. He expects a small plus, says Commerzbank economist Christoph Balz. Private consumption is considered to be the mainstay of the world's largest economy. Two days earlier, the US Federal Reserve (Fed) presented their economic report. From the "Beige Book", stockbrokers try to derive indications of the Fed's monetary policy.

On this side of the Atlantic, however, there are hardly any appointments on the calendar. These include numbers for European (Wednesday) and British (Friday) Industrial production. In addition, the numbers must be German gross domestic product (Thursday) are expected in the fourth quarter with a minus of 5.2 percent, predicts Commerzbank expert Balz. The lockdown is likely to have weighed heavily on the economy at the end of the year.

Regardless of this, the starts on Friday Accounting season in the USA. As usual, the big banks will kick off Citigroup, JPMorgan and Wells Fargo.

Options on indices and individual stocks expire on the same day. On this date, stock prices usually fluctuate sharply because investors want to move the prices of the securities on which they hold derivatives in a direction that is favorable to them.