Worries prevail again: The German stock exchanges continued their downward trend of the previous week and fell noticeably despite a countermovement on Friday. As before, investors were unsettled by the unchanged rise in the number of corona infections, which was primarily due to feared countermeasures up to and including lockdown. This would hit the economy hard again, it was said. The fact that there was no breakthrough in the negotiations on a further stimulus package in the USA to alleviate the consequences of the pandemic also depressed mood. The upcoming US presidential election also created uncertainty. The figures for the reporting season were mixed, so that no clear impetus came from this side. In contrast, economic data provided some support.
The German share index (Dax) lost 2.0 percent on a weekly basis to 12,645.75 points. In contrast, the index value Deutsche Bank bucked the trend. The papers benefited, among other things, from the robust figures from the British bank Barclays. The MDax dropped 1.7 percent on a weekly basis to 27,279.59 meters. Here the Lufthansa course defied the negative trend with a weekly plus of over 10 percent. Some of the airline’s key data for the third quarter turned out better than expected, and there was also a general recovery in aviation stocks that were badly hit by the Corona crisis. The TecDax dropped by 4.2 percent to 3,028.89 points in a weekly comparison.
The prices on the German bond markets fell in the past week. The federal papers were burdened by well-received economic data from the USA and by hopes – from those that an agreement on a corona aid package in the USA and those that there would be an agreement between the EU and Great Britain for the period after Brexit will come. In a weekly comparison, the yield on the trend-setting ten-year federal bond rose from -0.63 to -0.57 percent. The current yield rose from -0.62 to -0.58 percent.
The US stock markets have trended weaker in the past week. Here, the dispute over another Corona aid package was the focus of investors, who, despite some signals in the other direction, still hope for one before the presidential election. The Dow Jones index was down 0.9 percent on the week to 28,335.57 points. The broader S&P 500 index fell 0.5 percent to 3,465.39 points. The tech-heavy Nasdaq-100 fell 1.3 percent to 11,692.57 points.
The uncertainty of investors and the associated volatility of the German stock exchanges are likely to continue this week. With the rising number of corona infections and the following countermeasures, the upcoming presidential election in the USA and the approaching Brexit, the mix of worries for the markets remains. Added to this is the lack of an aid package in the USA and the fact that a number of economic data recently no longer showed the recovery dynamic as it did a few weeks ago.
The extent to which the latter will continue is something that market participants will pay attention to in the coming days, when a series of high-profile economic data is due. From Germany, the Ifo business climate, the labor market figures, retail sales and gross domestic product should be mentioned in particular. Unemployment figures and gross domestic product also come from the euro zone, and the result of the council meeting of the European Central Bank (ECB) is pending. However, only very few observers expect new steps; the ECB should rather confirm its willingness to take them if the Corona crisis makes this necessary. In the USA, among other things, the gross domestic product and data on personal income and expenditure as well as consumer confidence and indices from local central banks are published.
In addition, investors’ attention is likely to be focused on the reporting season, which is gaining momentum in this country. Around a third of the index values provide figures from the Dax alone, including BASF, Beiersdorf, Delivery Hero, Fresenius, MTU and Volkswagen. In addition, there are a number of figures from the second and third series of exchanges. In the USA, the tech giants Alphabet, Amazon, Apple, Facebook and Microsoft give insights into their books.
Selected important dates of the week
Tuesday, October 27th: Incoming orders for durable goods in the US; S&P / Case-Shiller House Price Index (USA); US consumer confidence
Wednesday, October 28th: US goods trade balance; Result of the Council meeting of the Bank of Canada
Thursday, October 29th: Labor market data for Germany; Consumer prices in Germany; Result of the council meeting of the European Central Bank; Business climate in the euro area, consumer confidence in the euro area; Gross domestic product of the USA; Personal consumption expenditure in the USA; Pending Home Sales in the US; Result of the Bank of Japan Council meeting
Friday, October 30th: Germany’s gross domestic product; Retail sales in Germany; Import prices in Germany; Gross domestic product of the euro zone; Consumer prices in the euro area; Personal Income and Expenses in the US; Chicago Purchasing Managers Index (USA); University of Michigan Consumer Confidence (USA)
Author: Dr. Robert Ertl, board member of Bayerische Börse AG
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