Following the DAX's recent series of record highs, investors in Germany could once again attempt to break further records. The rally is being driven primarily by the prospect of a continued prudent monetary policy by the US Federal Reserve. Investors are banking on monetary policy decisions remaining growth-friendly and predictable for the rest of the year. It is striking that geopolitical uncertainties are currently receiving little attention. Risks, which continue to hover over the heads of market participants like a sword of Damocles, are largely being ignored by the market. The market is clearly in risk-aversion mode. As long as the hope of a prudent monetary policy dominates, geopolitical negative factors take a back seat. The current New Year rally therefore appears to be intact for the time being. The pronounced lack of concern is driving share prices, but is also increasing the market's vulnerability should one of the suppressed risks suddenly come back into focus. As the week progresses, investors will be looking at further US price data and German economic stocks as well as further quarterly figures from the USA
DAX
Core US inflation rate lower than expected - interest rate cut fantasies remain alive
Following the publication of US inflation data on Tuesday, investors are likely to continue to rack their brains over the future shape of US monetary policy. In the world's largest economy, price pressure in December (compared to the same month last year) was 2.7%, the same as in November. However, the core rate of inflation was 2.6% in the same period and therefore below expectations (2.7%), also down from 2.6% in the previous month.
However, according to the CME Group's „Fed Watch Tool“, only 2.8% of market participants expect a rate cut of a quarter of a percentage point at the upcoming meeting on January 28 and 97.2% expect a pause in interest rates. The Fed is also scheduled to meet on March 18 and April 29 to decide on the future key interest rate level.
US producer prices could send important monetary policy impulses - GDP growth rate in Germany in focus on Friday
Today, Wednesday, US producer prices are on the agenda (14:30), which could also provide important monetary policy impetus. Retail sales will also be on the agenda at the same time.
While there are fewer potential drivers on Thursday's schedule, attention on Friday is likely to focus on the GDP growth rate for the year as a whole.
Even though the reporting season has not yet started in Germany, it may be worth taking a look at the quarterly figures in the USA. Traditionally, the major US banks have already kicked off the reporting season on the other side of the Atlantic.
Impetus from the USA conceivable: Major US banks present figures
Today, Bank of America (ISIN: US0605051046) and Wells Fargo (ISIN: US9497461015) as well as Citigroup (ISIN: US0605051046) will report on their business from the past quarter. On Thursday, Goldman Sachs (ISIN: US38141G1040) and Morgan Stanley (ISIN: US6174464486) as well as BlackRock (ISIN: US09290D1019) will be in the spotlight.
