The upward trend on the stock markets caused the Dax to rise to more than 13,2022 points on Tuesday for the first time since January 16, 000. Shortly after the opening of trading and a good 16,011 points, however, it turned negative to around 15,800 points in the afternoon. However, the record high of 5,2022 points in the course of trading on January 16, 285 remains within reach. The start of the war in Ukraine and the sharp rise in oil and gas prices had caused the index to fall to less than 12,000 points at the end of September before a momentum recovery began.

Daniel Mohr

Editor in business.

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However, their momentum is waning. The Dax rose from 12,000 to 13,000 points within three weeks in October, and another two and a half weeks later 14,000 points were reached again in mid-November. It took two months to reach 15,000 points in mid-January, and it took three and a half months for the next thousand. This weaker momentum leads some observers to assume that the bull market is slowly running out of steam and that the summer half-year, which is usually weaker anyway, will hold price losses rather than price gains.

Some observers are skeptical about the American market

The experts at Landesbank Baden-Württemberg and the fund company Bantleon support their scepticism with regard to the M1 money supply. This includes cash and daily money available in current and call money accounts and has fallen in recent months in the US as well as in Europe, which is rare and is considered a recession signal; as well as the yield curve, which has been inverted for months, with high interest rates for short maturities and lower interest rates for longer maturities.

The reason for the lower money supply is due to monetary policy, which is causing savers to reinvest their money at interest rates, but also to inflation. Due to the high prices, many households no longer have money to save and use up their reserves. Sooner or later, this will lead to consumer restraint, a desired effect of monetary policy, but one that dampens economic growth and could thus also weigh on equity markets. Some observers are skeptical about the American market in particular. There, stock market valuations are higher and tighter interest rates are hitting a real estate market that is threatened with capital outflows and falling prices.

The first effects were seen in March and now again with banks that are overwhelmed by the turnaround in interest rates. So far, however, the stock markets have coped well with this. For them, the advantage of the current economic situation outweighs the disadvantages: companies can push through higher prices and benefit from higher sales and profits. For example, the experts at asset manager Axa Investment Managers remind us that nominal sizes are relevant for the stock markets. Last week, for example, there was a lot of talk about the stagnating gross domestic product in Germany in the first quarter, but in nominal terms it grew by a good 6 percent, in the USA by 7 percent.

Accordingly, sales and profits of companies (in nominal terms) climb to record highs and thus the share prices, which are always quoted in nominal terms, are rising. A look at the details of inflation also shows that oil and gas companies in particular initially benefited from rising prices. In April inflation, which has now risen to 7 percent in the euro area, energy prices play only a subordinate role with a 2.5 percent year-on-year increase. Inflation has reached the breadth of products and is filling the coffers of companies, especially those with a strong market position and pricing power, which are disproportionately represented among large listed companies.

Good corporate results, which are ultimately the most important measure of equity valuations, are thus offset by risks such as further interest rate hikes by the US Federal Reserve on Wednesday and the European Central Bank (ECB) on Thursday. High interest rates could cause a (moderate) recession in countries like Germany and dampen the global economy. For the stock markets, however, such years were often rather good years – especially as soon as falling interest rates came into sight again.