At the end of September, when the consequences of war, bottlenecks in the value chain and inflation seemed fully priced into stock market prices, a new narrative gradually took hold on the stock market: central banks would raise interest rates in the fight against inflation, but corporate balance sheets were robust enough. The announcements of the central banks in Washington and Frankfurt were interpreted by many market participants as meaning that interest rates could slowly be frozen at the current level. Since there is no complete agreement in the houses on an end to the interest rate hikes, market participants sought the votes that fit their own perception.

Philipp Krohn

Editor in the economy, responsible for "People and Economy".

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During this time, the leading German stock market indicator Dax managed a light-looking and barely interrupted rise from 12,000 to more than 15,500 points. But this week, investors were paying attention. Statements by Federal Reserve Bank President Jerome Powell revealed fractures in this narrative. Because neither in the US nor in Europe is inflation going away as easily as hoped. This could necessitate further interest rate hikes.

From the current 4.5 to 4.75 percent, the US interest rate level could rise a good percentage point higher if inflation does not subside soon, the first traders suspect. The finish line could therefore be even longer in coming. And for the euro area, ECB President Christine Lagarde had already made it clear last week that 3 percent would be far from over. This can have a dampening effect on the stock market. On Friday, concerns about the banks also weighed on sentiment and prices, especially financial stocks.

Traders became more cautious again in the middle of the week. Even positive figures from the hitherto extremely stable labour market were only able to have a positive impact on prices for a short time. But even negative reports cannot affect the trade too much at the moment. The markets quickly coped with the deteriorating growth prospects of the Chinese economy. The losses on the overall market, which were triggered on Friday by concerns about a banking crisis, were also limited.

With Rheinmetall's rise to the DAX, armaments topics will gain more prominence. The company was unable to maintain the price increase at the beginning of the new listing, but the turning point will now also be reflected in the top German stock market segment.