Weekly outlook: The wait is over

“Erratic statements” expected from Donald Trump

At the start of the new week, investors are nevertheless looking to the USA, although the markets there will remain closed today due to Martin Luther King Day. Instead, Donald Trump's inauguration is on the agenda. Deka's economists warn that there is a high probability of erratic statements from Trump both before and immediately after the inauguration. Rethfeld expects a large number of decrees in the first few days in office. Investors are also likely to “look very closely at customs policy”. 

Recently, concerns in this regard have eased somewhat. “According to newspaper reports, market participants are hopeful that Trump will only be able to raise import tariffs gradually. This would bring further relief to the European stock markets in particular,” says Frank Klumpp from LBBW hopefully. Roth, on the other hand, fears a temporary rise in the inflation rate in the USA as a result of new tariffs, which could cause the calm on this topic to “quickly turn back into nervousness”. “In view of the tight labor market, migration restrictions also have the potential for disruptive fire due to feared consequences for wage pressure.”

Anxious look also towards Japan

The Commerzbank analyst has identified yet another potential disruptive fire for the stock markets. In his opinion, there are increasing indications that Japan will raise its key interest rates on Friday. “This should be borne in mind, as the last hike in the summer caused turbulence on the financial markets. The accompanying communication is therefore very important in this context,” explains Roth.

”21,000 points as the next price target”

According to Jörg Scherer from HSBC, there is a good chance that the DAX will reach the 21,000 point mark this week. He has long identified this area as a “price target from the long-term, trend-confirming sliding zone”. “This target is confirmed by a trend line in the monthly range that connects the highs of 2007 and 2015,” explains the experienced technical analyst. Accordingly, the upper Bollinger Band (currently at 20,751 points) and the upward gap that emerged on Friday (20,675 to 20,716 points) serve as initial support for the index. “On the other hand, it will be much more massive in the area of the old record level from mid-December at 20,523 points”.

Important economic and business events of the week

Monday, 20. January

Start of the World Economic Forum in Davos (runs until the end of the week)

Martin Luther King Day - markets closed in the USA

6.00 pm. USA: Inauguration of Donald Trump

Tuesday, 21. January

11.00 am. Germany: ZEW Index. Despite the already very poor sentiment among financial market analysts, Deka's strategists expect the ZEW index to fall again from 15.7 to 15.1 points. The uncertainties surrounding possible US tariffs and the outcome of the German general election should therefore lead to a further deterioration in economic expectations.

Wednesday, 22. January

Several speeches by members of the ECB Governing Council (including President Christine Lagarde) in Davos

Thursday, 23 January

2:30 pm. USA: Initial claims for unemployment insurance. Helaba analysts expect a slight increase compared to the previous week to 220,000 applications.

Friday, 24. January

Japan: BoJ interest rate decision. After the Bank of Japan last raised the key interest rate in March and July of last year, Deka assumes that the next increase will now take place. In view of a very low starting level of 0.25 %, increases of between 10 and 25 basis points are possible.

10.00 am. Eurozone: Purchasing managers' indices. “Service providers are driving growth and industry is weighing on economic development”, Deka's strategists continue to state a ‘division of the economy’. Overall, they expect the preliminary purchasing managers' indices for January to come in at 49.5 (after 49.6) points.

By Thomas Koch, January 20, 2024, © Deutsche Börse AG