As the week drew to a close, the Dax index ultimately returned to its daily average, after a positive morning, only a few points higher at the Xetra closing time, with a calculated value of 21,732 points, a slight increase compared to the previous day’s close.
Despite this, January proved to be an extremely positive month for investors, with new all-time highs. “It was a month for the record books” said Konstantin Oldenburger, market analyst at CMC Markets. “The Dax is on a high, as it rarely is. The leading index is, however, still running contrary to the economic condition of its underlying national economy. Interestingly, also stocks that were written off just two months ago are now in the spotlight. Auto values and the chemical industry are suddenly doing well. Volkswagen’s stock, the ailing giant of the German auto industry, has risen by 20 percent since the beginning of December, while the Dax has managed a 10 percent gain.”
As the month of January comes to a close on the stock exchange, it is often used as an indicator of the direction of the year to come. If January is positive, the S&P 500 tends to end the year higher in around 86 percent of cases, with an average gain of around 12 percent. A very impressive statistic and one that can be anxiously awaited this year as well.
A theme is emerging for the weekend that could impact the market on Monday. “US President Trump hinted yesterday that he will impose a 25 percent tariff on imports from Canada and Mexico on February 1st.” The previous statements were more explicit than earlier comments on this topic.
“In the end, a permanent tariff of this magnitude is unlikely to be the solution. Instead, it is more likely that Trump will announce a tariff that will be delayed, only applies to certain imports, or begins with a lower rate and will increase over time. These would be less negative scenarios for the stock market” said Oldenburger.
The European common currency was slightly stronger on Friday afternoon, with one euro costing 1.0400 US dollars and one dollar being worth 0.9615 euros, accordingly.