Weekly outlook: “Negative sentiment as a positive sign”

In addition to money, reforms are also needed

The amendment to the German constitution required for the billions in investments is to be passed in the Bundestag on Tuesday. Heiner Herkenhoff, Managing Director of the Association of German Banks, describes the agreement between the parties required for a two-thirds majority as a “first signal for growth and security”. However, in view of the recent significant rise in capital market interest rates, he also warns that financial resources cannot be used efficiently without far-reaching reforms to bureaucracy, regulation, planning and approval. “We need to become faster and more competitive for the package to really take effect”.

How will the US Federal Reserve react to Donald Trump?

In the middle of the week, central banks will once again be in the spotlight on the stock market. “When it comes to the Fed meeting, the focus will be on how the US central bank deals with the fickle Trump policy, which is causing more and more uncertainty in America and even stoking initial fears of recession,” explains Robert Greil, chief strategist at the private bank Merck Finck. According to LBBW, the “global upheavals that Donald Trump is triggering with his disruptive policies” harbor the risk of weighing on the markets for longer. The S&P 500 has already fallen below its 200-day line, which in the past has “often - but not always - been a signal for a longer and/or significant subsequent bear market”.

Stronger fluctuations and poor sentiment

What is striking about the DAX, according to the analysts' analysis, is that the index has already fluctuated by more than one percent compared to the previous day 19 times this year. In 2024 as a whole, the German blue-chip index had only risen or fallen by more than one percent on 44 days compared to the previous day. So the calm on the stock markets is over. All in all, the DAX has nevertheless risen by more than 15 percent since the beginning of the year. Commerzbank strategists recommend that investors keep an eye on the short-term support level of 22,200 points. On a positive note, they say that equity sentiment is “as bearish as it was last in September 2022”.

Important economic and business events of the week

Monday, 17. March

1:30 pm: USA: Retail sales. Commerzbank strategists expect the figures to provide an initial indication of whether the situation is actually as bleak as the sentiment. After a decline in January, this time an increase of 0.4 percent compared to the previous month is expected.

Tuesday, 18. March

10.00 am. Germany: Vote in the Bundestag on easing the statutory debt brake

11.00 am. Germany: ZEW Index. After the economic expectations of financial market analysts surveyed by Sentix recently soared, the economists at Deka expect “the euphoria about the ZEW index to be somewhat more muted”. One of the reasons they cite is the intensifying customs dispute. However, the forecast range of all economists is unusually broad this time.

2:15 pm: USA: Industrial production. According to Commerzbank analysts, the data for the past month should provide an indication of whether the moderate improvement in sentiment in US industry is also reflected in the hard data.

Wednesday, 19. March

Japan: BoJ interest rate decision. Analysts and economists expect the Bank of Japan to leave the key interest rate unchanged at 0.5% this time. However, a good two thirds of economists expect a rate hike of 25 basis points in the third quarter.

7.00 pm. USA: Fed interest rate decision. According to Commerzbank, there is broad consensus among economists and also in view of the expectations priced in on the money market that the Fed will leave key interest rates unchanged at between 4.25% and 4.5%. The somewhat lower than expected rise in US consumer prices last week is not expected to have changed this.

Thursday, 20. March

UK and Switzerland: Interest rate decision. According to Deka, the Bank of England is now likely to take a break in March after cutting interest rates for the third time in February to 4.50% and will probably take the next step downwards in May. By contrast, experts expect the Swiss central bank to cut its key interest rate again to 0.25% due to inflation rates close to zero.

1.30 pm. USA: Initial jobless claims. 

Friday, 21. March

Around 1 p.m.: Major expiry date on the important futures markets worldwide.

By Thomas Koch, 17. March, 2025, © Deutsche Börse AG