Weekly outlook: “Nvidia figures the most important date of the week”

After political events have dominated events on the stock markets recently, the focus this week is once again on the reporting season. Nvidia's midweek outlook is seen as a landmark event.

18 November 2024 FRANKFURT (Frankfurt Stock Exchange). European share indices finally showed relative strength last week. Although the major US indices S&P 500 (-2.1 percent) and Nasdaq 100 (-3.4 percent) lost significant ground, the DAX ended trading on Friday almost unchanged from the previous week at 19,211 points. The Euro Stoxx 50 also held up well with a small fall of 0.2 percent. In the days surrounding the US presidential election, things had looked very different.

A fine line for the AI profiteer

The most important event of the new week is scheduled for Wednesday after the US stock market closes. AI profiteer Nvidia, currently the most valuable company in the world, will then publish its quarterly figures. “The outlook is particularly important for sentiment,” say the specialists at Deka. Our colleagues at Commerzbank take the same view. In their opinion, the sales target for the current quarter should be at least 10% higher than the previous period. For the share, which has risen by almost 190% so far in 2024, there is a fine line between doing too well (“It can't get any better!”) and narrowly missing growth expectations. In the last six quarters, however, this has always “worked out well” for Nvidia and thus for the markets.

New elections as a liberating blow?

The recent profit-taking on the US markets was attributed in part to Federal Reserve Chairman Jerome Powell, who put a damper on hopes of further rapid interest rate cuts. In the eurozone and especially in Germany, on the other hand, the economic situation is so bad that analysts believe the ECB will not be able to avoid significantly lower interest rates. In Germany, the prospect of a change of government and policy could also support share prices. “In view of the persistently poor mood in the economy, many are betting on at least a psychological liberation in the wake of new elections,” writes Helaba. In this context, the purchasing managers' indices for October, which are due on Friday, are likely to “highlight the seriousness of the situation once again”.

The “fear of missing out” phenomenon is back

Robert Halver from Baader Bank is fundamentally optimistic about the stock markets, although the expert does not want to rule out temporary (in his view healthy) setbacks. However, the “increasing put positions of institutional investors” should provide downside protection, so that any corrections “will be dealt with quickly overall and a painful sell-off is not to be feared”. The main reason for his confidence is that all investors who had not yet positioned themselves before the US election will now have to chase the market. “From a sentiment perspective, fomo ('fear of missing out'), i.e. the fear of missing out on the rally, is back”.

Impending shoulder-head-shoulder formation

From a technical perspective, Halver sees the next resistances for the DAX at 19,300 and 19,450 points, before further barriers follow at 19,555 and 19,605 points. In the event of setbacks, he anticipates support at 19,150 and 19,050 points. “Below this, the levels of 19,000 and 18,893 points offer support,” says Halver. Jörg Scherer also believes that this area is the “core support zone” of the leading German index, which “must be defended at all costs in the future”. If this does not succeed, the DAX is threatened with a trend reversal pattern in the form of a shoulder-head-shoulder formation, according to his analysis.

Important economic and business events of the week

Monday, 18 November

16.00. USA: NAHB Housing Market Index. The economists at Nord/LB expect an index level of 43 points for November, while their colleagues at Deka expect 44 points. Both institutes are thus significantly more optimistic than the strategists at LBBW (40 points).

Brazil, Rio de Janeiro: G20 summit of heads of state and government

Tuesday, 19 November

14.30. USA: New housing starts. A moderate decline is expected compared to the previous month. Deka is particularly skeptical, forecasting a drop of almost 4 percent. The reason given is a possible hurricane impact.

Wednesday, 20 November

08.00 am. UK: Inflation data. Deutsche Bank economists expect a “mixed bag of data”, with core inflation likely to fall further.

Thursday, 21 November

16.00. Eurozone: Consumer confidence. According to Deka, the signs for consumer confidence in the eurozone are poor. The economists refer to a Reuters survey according to which consumer sentiment has fallen in Germany, France, Italy, Spain and Belgium. Anything other than a decline (previous month: -12.5) would therefore be “a noticeable surprise” in Deka's view.

Friday, 22 November

09.30 am. Eurozone: Speech by ECB President Christine Lagarde (Frankfurt)

10.00 am. Eurozone: Purchasing Managers' Indices. The purchasing managers' indices for November published at the end of the week (also in the UK and individual eurozone countries) are the “data highlight of the week” for the economists at Deutsche Bank. In their view, they serve as a “health check for global growth”. While a value above the threshold of 50 is once again expected for the services sector in the eurozone, the index for the manufacturing industry is likely to remain well below this level at 46.

By Thomas Koch, 18 November, 2024, © Deutsche Börse AG