It was a record high with an announcement: After the highs of the US stock markets on Wednesday, it was only a matter of time before the Dax would also make the small jump over the mark of 14,000 points. Now the time had come: The most important German share index rose to 14,007.47 points and was thus higher than ever since its introduction in 1988. Since its corona low last March, the index has gained almost 60 percent in value, including dividends.
The trigger for the latest stock market rally, which has now spilled over into the German market, is the prospect of a state-funded economic stimulus program in the USA under President-elect Joe Biden. The prospect of this has brightened significantly after Biden’s party, the Democrats, surprisingly won both Senate posts in the US state of Georgia. This gives them 50 of the 100 Senate seats, so that they have a majority vote with Vice President-elect Kamala Harris, who will chair the Senate. This is particularly important for the implementation of the fiscal packages planned by Biden.
“The constellation leads us to expect further fiscal stimulus measures in the USA,” said Commerzbank analyst Daniel Briesemann. “New Corona aid measures that have been rejected by the Republicans so far could be decided in the short term.” Since the mood of investors was already positive because of the election result, new economic data from the USA fell on fertile ground. In the end, they gave the Dax the decisive kick above the 14,000 mark. The US service sector is doing better than expected. The purchasing managers’ index, which was collected in December and provides information on the business outlook for the industry, was 57.2 points after 55.9 points in November. Values above 50 usually indicate growth.
Goldman Sachs corrects forecast upwards
The economists at Goldman Sachs expect another fiscal package of $ 750 billion to be launched in the first quarter, of which $ 300 billion will be in the form of direct payments to citizens. In particular “because of the election result in Georgia” they have raised their growth forecast for the US economy for this year to 6.4 percent from 5.9 percent previously. According to the bank, the market consensus is currently 3.9 percent. The German export industry should also benefit from higher US growth.
Should the Goldman view prevail among investors, the stock markets would have further price potential. If the economy is better, the companies also earn more, which leaves room for higher prices if valuations remain unchanged. However, the stock markets are currently very highly valued. The Dax has a price / earnings ratio of 24.8, which means it is valued at 24.8 times the earnings expected in the next twelve months. That is well above the historical average. In the past, the average was 19.
After the storming of supporters of the elected President Donald Trump on the US Congress on Wednesday, investors should have reassured that parliament can work again and that a regulated transfer of power in Washington is now emerging.
Incoming orders better than expected
Even if the Dax record high is mainly a reaction to developments in the USA and the positive global investor sentiment, there was still a bit of tailwind from home. Because economic data that defied the Corona crisis were also published in Germany. As early as November, at the beginning of the current lockdown, German industry posted a plus of 2.3 percent in incoming orders compared to October. The forecasts, however, were for a minus of one percent.
“The companies are making every effort to replenish their stocks, which had shrunk over the pandemic as a result of the production downtimes,” explained Martin Moryson, European chief economist at the DWS fund company. “This is very good news for the manufacturing industry. The ‘lockdown light’ in November seems to have had little effect on the industry. It is therefore to be expected that the failures due to the tightening in December and now in January will remain manageable. “
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