WEEKLY OUTLOOK: Between Corona Fear and Economic Hope | 06/29/20

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FRANKFURT (dpa-AFX) – Also in the new week, the German stock market is likely to move between the fear of a second wave of new corona infections and economic signals of hope. After the three-month recovery rally, further profit-taking could not be ruled out in the short term, the experts at Landesbank Baden-Württemberg (LBBW) noted. Especially since the upcoming announcement of the company figures for the second quarter should become obvious how strongly the corona pandemic had an impact on the group results.

The Dax had now recovered from its March low of 8255 points by more than half to around 12,900 points before it ran out of steam recently. However, the Dax remained above the 12,000 mark for the most part last week.

The latest price setbacks on the stock market have recently been quickly offset by new purchases. Because of the current worries about a possible second corona wave, the nervousness of investors has increased again. This particularly affects the United States, where easing measures may have been announced too early, emphasized Chris-Oliver Schickentanz, chief investment strategist at Commerzbank. In Europe, on the other hand, only serious individual cases of massive new spread have been recorded, which could be limited with measures. “As long as this succeeds, the second wave in Europe will luckily not happen, but it will remain as a risk,” says Schickentanz.

Helaba analyst Markus Reinwand pointed out that the Dax (DAX 30) no longer benefited from the recent significant increase in Ifo expectations for the next six months, despite the recent brightening of the economic outlook. “This supports the thesis that stocks have anticipated too many positive things too quickly. Now the air has become very thin – also because the pandemic is far from over,” said Reinwand.

In addition, stocks are quite valued worldwide. On the basis of the most important absolute valuation ratios, German standard values ​​were slightly above the fair range. “Now the fundamentals have to understand what stocks have already anticipated. There is therefore hardly any upside potential for dividend stocks in the coming months,” the analyst stated and recommends: Shares of potential weaknesses are awaited. “

Commerzbank investment expert Schickentanz also pointed out that the extent of the economic recovery depends on the decline in the number of infections. Most leading indicators have recently shown clear signs of hope. This week, too, important data would be on the agenda, which should confirm the picture of a noticeable economic recovery in the third quarter. In this context, he named the Chinese purchasing manager indices on Tuesday and Wednesday.

The high-profile manufacturing ISM index will also be released in the United States on Wednesday. On Thursday there will also be insights into the job market in the USA. Schickentanz believes that the easing will have led to a strong increase in employment again. He expects correspondingly positive trends in the unemployment rate and new applications for unemployment benefits.

Ulrich Kater, Dekabank’s chief economist, expects another strong report to maintain confidence in the country’s economic recovery after the recent positive surprises in US job market data. The US consumer climate, measured by the Conference Board’s consumer confidence, will be released on Tuesday. According to the hangover, this should be more confident.

Christoph Swonke, economist at DZ Bank, also rates the flash estimate of the inflation rate for the euro area on Tuesday as one of the most important data releases in the new week. According to Swonke, the latest trend of falling inflation rates has hardly changed in June. However, the price declines in energy and the increases in food should each be somewhat less pronounced. In addition, the preliminary results on inflation rates from Germany, France, Italy and Spain are also published. “Overall, we continue to expect price increases to be at a very low level,” said Swonke.

From the company’s perspective, the eyes of the new week continue to focus on the balance sheet scandal surrounding the payment processor Wirecard, which has declared bankruptcy. Otherwise, it will be interesting for GRENKE investors on Thursday when the IT leasing provider publishes figures for its new business in the second quarter. / Edh / knd / mis / jha /

— By Eduard Holetic, dpa-AFX —

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