Christmas presents: the German stock exchanges recorded significant gains in the last, last full week of trading of the year. Mainly hopes drove the markets: Such for an early start of the corona vaccinations in the EU, for state aid against the consequences of the new lockdowns, for an economic stimulus package in the USA and for an agreement between Great Britain and the EU on a trade agreement in last minute. Additional support came from some well-received, robust economic data such as corporate sentiment in the euro zone and the Ifo business climate index in Germany. At the end of the trading week, the stock exchanges did a moderate uphill and downhill run and ultimately gave up some of their previous profits, but this was partly due to the so-called “Witches Sabbath”, the big expiry date on the derivatives exchanges.
The German share index (Dax) gained 3.9 percent on a weekly basis to 13,630.51 points. In addition to the Corona winner Delivery Hero, the big winners in the index included automobile titles such as Daimler and Volkswagen, and the titles of the automotive supplier Continental also rose above average. Over the course of the week, the MDax once again set new records and rose above the 30,000 mark for the first time; on a weekly basis it was 2.7 percent to 30,405.62 points. The TecDax rose by 3.0 percent to 3,195.99 points. The m: access All-Share increased by 1.8 percent to 2,824.77 points.
The German bond markets were noticeably weaker in the past week. The same factors that contributed to the good mood on the stock exchanges weighed on the federal securities, which are considered safe. As a result, the yield on the trend-setting ten-year federal bond rose from -0.64 to -0.58 percent. The current yield increased from -0.63 to -0.56 percent.
The US stock markets rallied last week. At times, new record levels were even reached, but on Friday there were also moderate losses. In a weekly comparison, the Dow Jones index advanced 0.4 percent to 30,179.05 points. The broader S&P 500 index improved 1.3 percent to 3,709.41 points. The technology-heavy Nasdaq-100 climbed 2.9 percent to 12,738.18 points.
Will the Dax achieve a new record high in the current, shortened trading week or not? This question worries a number of market observers after the previous record level has been approached last Friday. How the question will be answered this Wednesday, the last trading day before the holidays in Germany, will depend, among other things, on the negotiations between the EU and Great Britain on a trade agreement. Here investors have been hoping for an agreement lately, and those hopes are likely to continue as long as there are no results and there is still time. Should an agreement still be reached, however, it remains to be seen whether it would give the markets a noticeable boost or whether it has already been largely priced in by the stock exchanges. On the other hand, failure is likely to lead to noticeable market reactions. With regard to the agreement on the economic stimulus package in the US, the question arises whether investors will focus on the adoption here or whether the significantly smaller size compared to the first aid package will disappoint.
The Corona issue, in turn, could affect the markets at least at the beginning of the trading week. It is true that when looking at the pandemic, the vaccination hopes outweighed the concerns about the increased number of infections and deaths and the new lockdowns. However, the discovery of a mutated virus variant in Great Britain, among other places, and the associated measures could again depress the mood in the markets.
Economic data should only play a subordinate role this week, as there are only a few potentially market-moving publications on the agenda. These include GfK consumer confidence in Germany and personal income and expenditure as well as consumer sentiment from the USA.
With regard to individual stocks, Tesla stocks are likely to be the focus of many investors at the beginning of the trading week. The electric car maker, whose price has multiplied over the course of the year, will join the S&P 500 index on Monday. In addition, values that have gone well so far in the course of the year could improve further in the coming days, which could then also be related to so-called “window dressing” – this is what is said when fund managers add successful stocks of the year to their portfolios at the end of the year in order to make them look good to improve.
Selected important dates of the week
Monday. 12/21: Chicago Fed National Activity Index (US); Result of the Council meeting of the Bank of China
Tuesday, December 22nd: GfK consumer confidence (Germany); Personal consumption expenditure in the USA; Existing home sales in the US
Wednesday, December 23rd: US Personal Income and Expenses; University of Michigan Consumer Confidence (USA); New home sales in the US
Thursday, December 24th (Christmas Eve): New orders for durable goods in the United States
Friday, December 25th (1st Christmas Holiday)
Author: Dr. Robert Ertl, board member of Bayerische Börse AG
Livestream on December 14th, 2020 from 6 p.m .:
With Hans-Werner Sinn, former President of the Ifo Institute: Corona and the miraculous increase in money in Europe
– Here is the stream! –