Market outlook: “Will the US economy make a soft landing?”

After the record highs, the outlook for the stock markets remains good - according to the prevailing opinion. However, short-term setbacks are always possible. 
 

23 September 2024. FRANKFURT (Börse Frankfurt).The fact that the US Federal Reserve cut key interest rates by 50 basis points on Wednesday, rather than just 25, has boosted the markets. On Thursday, the Dow Jones, S&P 500 and the DAX climbed to new all-time highs. Only the Nasdaq 100 is still some way off its record high from July. “The interest rate turnaround in the USA was duly celebrated with a slight delay,” comments Christian Henke from IG.

“More and more investors are convinced that the unexpectedly brisk US Federal Reserve will actually succeed in bringing the US economy to a soft landing,” explains Thorsten Weinelt from Commerzbank. Economic data is being scrutinized to see whether it supports the scenario of a sustained robust US economy. “The decisive factor for equities will be whether the US Federal Reserve actually succeeds in achieving a soft landing,” says Weinelt.

After the DAX reached a new all-time high of 19,045 points on Thursday, it was only 18,720 points again at the close of trading on Friday. The profit warning from Mercedes-Benz weighed on the index. On Monday morning, the DAX stood at 18,767 points. The US stock markets closed little changed on Friday after reaching all-time highs on Thursday.

Interest rate cuts with two “pleasant prospects”

“The Fed has the number against fall depression woes,” explains Robert Halver from Baader Bank. He assumes that the wave of interest rate cuts will continue until 2026, which offers equities two “pleasant prospects”: Firstly, falling interest rates increased their relative attractiveness. And secondly, they strengthen the economic upswing and thus the earnings quality of cyclically sensitive companies in particular.

“In principle, however, consolidation and temporarily increased price fluctuations are the order of the day in the coming weeks,” emphasizes Halver with a view to further US interest rate cuts and the approaching US presidential election. However, these would offer favorable entry opportunities, as they would only temporarily mask the longer-term attractive market conditions. “At the very least, investors should continue or start their equity savings plans.”

“Temporary breather”

According to the chart technicians at DZ Bank, the approach to the upper Bollinger band that accompanied the record high triggered a technical counter-reaction. This triggered further price setbacks on Friday. “The temporary breather could act as a basis for the next trend surge in the DAX.” This scenario is currently being confirmed by buy signals from moving averages and the slow stochastics. The daily high of September 20 at 18,910 points now marks the first barrier, the second is the most recent all-time high. “The long scenario is invalid if the DAX falls below the 18,537-point mark on a closing price basis.”

Important economic and business events of the week

Monday, 23 September 

New index composition: The changes to the composition of the DAX indices announced at the beginning of September come into effect today: Hypoport and Schott Pharma are new to the MDAX. Instead, Encavis and Evotec are leaving the index and are now part of the SDAX. Deutsche EuroShop is also new to the SDAX. In addition to Hypoport and Schott Pharma, Baywa is also leaving the SDAX. DAX and TecDAX remain unchanged.

10.00 am. Eurozone: Purchasing Managers' Index September.

Tuesday, 24 September 

10.00 am. Germany: ifo Business Climate Index September. After Sentix and ZEW Climate, the ifo Business Climate will also continue its downward trend, says DekaBank. Weak economic indicators, downwardly revised economic forecasts and unclear prospects are weighing on business sentiment.

4.00 pm. USA: Consumer Confidence Conference Board. The market expects a stable development.

Thursday, 26 September 

2.30 pm. USA. New orders for durable goods August. Expected to be down 2.8 percent from the previous month.

Friday, 27 September 

2.30 pm. USA: Price index for consumer spending excluding food and energy. According to Deutsche Bank, the index is likely to have fallen from 2.5 to 2.3 percent year-on-year. The core rate is likely to have risen slightly from 2.6 percent to 2.7 percent.

2.30 pm. USA: Consumer spending August. U.S. consumer spending is expected to have grown 0.3 percent month-over-month, Commerzbank says, following July's 0.5 percent gain. 

Von Anna-Maria Borse, 23 September 2024, © Deutsche Börse AG