Market outlook: Course to 20,000 points

Falling interest rates, the first convincing company figures - the stock markets remain in a record mood. Hardly anyone is talking about overvaluation, at most a “certain breathing space”

21 October, 2024 FRANKFURT (Frankfurt Stock Exchange). How are companies performing in the current environment? This question is currently being answered with numerous reports on the third quarter. US companies kicked things off, with SAP starting here today. “The start to the US reporting season has been a success,” comments Ulrich Kater from DekaBank. The major and investment banks in particular have delivered strong quarterly figures and constructive outlooks. He is also optimistic for the coming weeks: “We expect mostly good figures.”

The DAX is receiving good guidance from the USA. The Dow Jones continued its record-breaking streak there on Friday. The DAX stands at 19,625 points on Monday morning, only slightly below the all-time high of just under 19,675 points on Thursday. The price of gold, which has just reached a new all-time high of 2,730.93 US dollars, remains conspicuous. 

Looking forward to Trump?

On Thursday, the ECB cut its key interest rate once again. Further steps are expected this year - fuel for the stock markets. The US election on November 5 is also approaching. “Whether the stock markets are already looking forward to Trump is speculation,” notes Claudia Windt from Helaba. A victory for the ex-president, whose favorite word is “tariffs”, would hardly be considered good news for the European economy. She does not believe that Trump's policies will really lead to an upturn for America. In the short term, however, she also sees the focus on the reporting season. “A pause for breath in the record chase on the markets would come as no surprise.”

Next upward impulse in sight

But confidence also prevails in the short term. According to Christian Henke from IG, the DAX could now start its next upward impulse. This would require a significant jump above 19,650 points. It could then head towards the 20,000-point mark. “The undertaking could well succeed,” says the chart technician. Momentum is above the zero line and the short-term downward trend has been overcome.

“Lack of euphoria is healthy”

Christoph Geyer points out that the positive comments in the recent upward movement have been less pronounced - a positive sign. “There is no euphoria, which makes sense for a healthy upward trend,” emphasizes the chart technician. As the year-end rally is in full swing, there is now a good chance of reaching the “big round mark” of 20,000 points.  Turnover has not been able to keep up with the price development. However, this should not be overestimated, nor should the indicators, which remain in overbought territory. “A strong trend usually ignores many overbought indicators.” This means that the coming weeks will continue to be characterized by friendly prices - if there are no new disruptive fires from outside.

There is hardly any economic data this week, but the reporting season is picking up speed. In addition to SAP, Deutsche Börse, Deutsche Bank, Beiersdorf, Symrise, MTU, Mercedes-Benz and Porsche AG will publish their figures for the third quarter this week - according to Deutsche Bank, a total of 95 companies from the Stoxx 600. In the USA, figures will be published by Tesla, Boeing, IBM and Coca-Cola, among others.

Important economic and business events of the week

Thursday, 24 October

10.00 am. Eurozone: Purchasing Managers' Index October. Economic progress in the eurozone is slow, notes DekaBank. Although the service sector is doing well, industry is in a pronounced phase of weakness.

Friday, 25 October

10.00 am. Germany: ifo Business Climate October. After four consecutive declines, there could finally be an increase, according to Helaba.

2.30 pm. USA: New orders for durable goods September. The market expects a decline of 1.1 percent compared to the previous month.

From Anna-Maria Borse, 21 October, 2024, © Deutsche Börse AG