The Dax index started positively in the trading day on Friday morning. By 9:30 am, the benchmark index was calculated at around 20,510 points, 0.4% above the previous day’s closing level.
“Investors are taking the European Central Bank’s interest rate cut well and are not seeing a reason to adjust their stock positions before a potential further easing of monetary policy by the US Federal Reserve next week, following the strong gains in the previous week” said Jochen Stanzl, Chief Market Analyst at CMC Markets. “However, as the rally is over, the buyers are missing, so the German stock index is likely to remain sideways in the weekly trend.”
“The central economic conference in China was a complete disappointment. The government still owes investors the concrete measures announced just a few days ago” said Stanzl. “Apparently, the politicians in Beijing have lost their courage, as they are dependent on the monetary and foreign policy signals from Washington. A further interest rate cut by the Fed, followed by a pause, is as likely as ever, given the inflation data this week.”
Uncertainty also surrounds how Donald Trump’s policy towards China will look. Beijing wants to hoard its ammunition until 2025, in case of an emergency, rather than using it up in advance of possible tariffs. “So, investors should wait until the first quarter of 2025 for concrete measures to be announced” said Stanzl.
“And for the Dax in Frankfurt, that means: new signals are not to be expected until the first weeks of the coming year, when the elections here, Trump’s inauguration, and China’s economy will show new developments. Then it will be clear if the already distributed pre-holiday bonuses were justified or not” said Stanzl.
The European common currency was slightly weaker on Friday morning: one euro was worth around 1.0466 US dollars, and one dollar was worth around 0.9555 euros.