A brief touch of panic: the majority of the German stock exchanges showed a slight minus in the past, shortened trading week. This was due to a price slump at the beginning of the week, which in turn was due to concerns about a new, more aggressive Corona variant. On the other two trading days, investors were clearly in a buying mood, which was justified by the prospect of the early start of the corona vaccinations and hopes for a trade agreement with Great Britain at the last minute. However, the gains were not enough to offset Monday’s price plunge.
The German share index (Dax) dropped 0.3 percent to 13,587.23 points compared to its previous weekend. Contrary to the trend, the price of the Continental index rose; the automotive supplier benefited from speculations about an IPO of the powertrain division. The stocks of HeidelbergCement also improved, here was a report on a possible billion dollar sum that could be achieved in the sale of the California business. The MDax improved slightly compared to its level on Friday the previous week to 30,413.79 meters. The TecDax fell 0.4 percent to 3,183.97 points. The m: access All-Share lost 0.6 percent to 2,807.19 meters.
The German bond markets have not found a clear direction in the past week. While the new mutation of the corona virus and fears of more extensive restrictions as a countermeasure gave the federal papers a boost, speculations about a trade agreement between the EU and Great Britain are weighing on. The yield on the trend-setting ten-year federal bond rose from -0.58 on the Friday of the previous week to -0.55 percent at the end of trading last Wednesday. The current yield, on the other hand, fell from -0.56 to -0.60 percent.
In the past week of trading, the US stock exchanges largely offset a significant minus on Monday, with shortened trading also taking place on Thursday in the USA. The Dow Jones index was up 0.1 percent on Friday the previous week to 30,199.87 points. The broader S&P 500 index fell 0.2 percent to 3,703.06 points. The technology-heavy Nasdaq-100 also lost 0.2 percent to 12,711.01 points.
In the past week of trading, a brief attack of weakness spoiled the balance sheet of the German stock exchanges, now some market participants are hoping for a new record high for the Dax in the remaining three trading days of the year. On the one hand, US President Donald Trump has ended his blockade of the US economic stimulus package, which means that the aid can come into force. Above all, however, two other topics could further stimulate the already good investor sentiment: the start of the corona vaccinations in Germany and the agreement between the EU and Great Britain on a post-Brexit trade agreement announced on Christmas Eve. It remains to be seen whether the latter will actually have a major, lasting effect on the markets. Investors are likely to be relieved that a hard Brexit will not come after all, as has recently been increasingly feared. However, many investors had already opted for an agreement, so that this could already be largely priced in. In addition, the agreement still has to be ratified and, after all, not even an agreement will solve all difficulties. Still, there is potential for a price boost.
On the other hand, the increasing concerns of some medical professionals regarding the recently discovered corona mutation could at least temporarily cloud the vaccine euphoria seen by many investors. In this respect, when it comes to the pandemic, it remains exciting once again whether an optimistic or pessimistic view will prevail, which means that the last, shortened trading week is exemplary for many weeks of the year that is coming to an end.
With regard to economic data, there are only a few, potentially market-moving publications on the calendar, so that the impulses from this side should be manageable. Trading volumes are likely to continue to decline as many large investors have already closed their books and many investors, regardless of size, are on vacation. However, this could also lead to more significant price movements.
Selected important dates of the week
Monday. 12/28: Dallas Fed Manufacturing Index (USA)
Tuesday, December 29th: S & P / Case-Shiller House Price Index (USA)
Wednesday, December 30th: Retail sales in Germany; Pending Home Sales in the US; Chicago Purchasing Managers Index (USA); USA trade balance of goods
Thursday, December 31st (New Year’s Eve): Purchasing Managers’ Index for the non-manufacturing sector in China
Friday, 01.01. (New Year)
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! –