Markets

Cheers on the stock exchange

Gute mood on the stock exchange. Although the economic consequences of the Corona crisis cannot be estimated at all, the recovery continues on the stock exchange. After the leading German index Dax had already jumped above the 12,000 mark on Tuesday, it settled there on Wednesday. The Dax has thus returned to the price level at the end of February. As a result of the events surrounding the Corona crisis, the Dax fell below 9000 points in March. The Dax is in good company with other indices. The M-Dax, the Tec-Dax and the Euro Stoxx 50 have been climbing upwards for days.

With cyclical stocks in particular, we expect a short-term positive development, says Maximilian Kunkel, chief investment strategist in global wealth management at the major Swiss bank UBS. A further solid development is expected for the fourth quarter. The reason for this is that consumers are expected to be more willing to spend. While earnings for many workers remained stable, the lockdown even reduced spending. This consumption will now be made up. In addition, companies should increase their inventory as a precautionary measure alone. Kunkel cannot promise that cyclical stocks will not suffer further setbacks. “The danger is not averted.”

Set up for volatility

In order to be more certain, one would have to see significantly higher bond yields due to sustained higher growth. “But we don’t see them,” says Kunkel. In addition, there is always uncertainty about a possible second wave of the corona pandemic. The chief investment strategist then continues to advise investors to be selective in their investment strategy. Companies in the healthcare or technology sectors have the best long-term prospects of success. “Much of the upward movement in European equities in the past few weeks has certainly been driven by hopes surrounding the Recovery Fund,” says Matthias Hoppe, fund manager at the American fund company Franklin Templeton. In addition, there would be extremely low and even negative interest rates.

“Even if we have seen positive performance, there are still enough risks,” says Hoppe. The trade conflict between America and China could escalate again and relations between the two countries deteriorated further. This issue had already had a negative impact on the markets in 2018. “Investors should be prepared for volatility in the coming months,” said the fund manager.

Bad news from America

In any case, it is extremely strange that the share prices continued to rise despite unfavorable news from America, says capital market analyst Joachim Goldberg. Interestingly, the volatility measured by the V-Dax New did not fall significantly, but remained above the 30 percent mark, around twice as high as before the onset of the Corona crisis. “I have the impression that very few are able to cope with the current development. If the general conditions were not so negative, you might think we would be in the middle of the dotcom bubble. ”

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