According to experts, the weal and woe of the stock exchanges will largely be determined by one man for the foreseeable future: Joe Biden.
“Whether the stock exchanges keep their momentum in the coming weeks will depend above all on how quickly the Democratic US president can implement his ambitious spending plans,” says market analyst Milan Cutkovic from the brokerage firm Axi. Biden wants to cushion the economic consequences of the coronavirus pandemic with an aid package worth almost two trillion dollars.
However, experts disagree as to whether the new US president will get his plans through Congress. Neil Wilson, chief analyst of the online broker Markets.com, points out that the Democrat must at least get some Senate Republicans on his side. “That shouldn’t be a problem,” says Naeem Aslam, chief market analyst at brokerage firm AvaTrade. In the old week, the Dax could not regain the psychologically important mark of 14,000 points permanently and the bottom line was that it hardly moved.
Regardless of the recent course records at Dax, Dow Jones & Co., no speculative bubble can be observed, says Eckhard Schulte, head of the asset manager MainSky. “That may be true for individual stocks, but we do not share this opinion for the market as a whole. On the contrary, especially with a focus on the relevant drivers ‘earnings development’ and ‘valuation’, the stock market appears to us to be quite rational.”
BALANCE SHEET SEASON RUNS ON FULL TOURS
With this in mind, investors will check the upcoming company balance sheets and company outlooks. Here, course setbacks cannot be ruled out, warned Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank. Because the stock market cycle is currently in the transition to the growth phase, in which companies increase their profits and “grow into” their valuations.
In Europe, the medical technology company Philips and the luxury goods manufacturer LVMH will open their books in the new week. Across the Atlantic, the technology companies Apple and Facebook present business figures. They are joined by the electric car manufacturer Tesla.
NUMEROUS ECONOMIC DATA AHEAD
In terms of economic data, stockbrokers direct their attention, among other things, to US consumer spending on Friday. The buying mood of consumers is considered to be the mainstay of the world’s largest economy. The day before, the US leading indicators are on the schedule.
On this side of the Atlantic, the Ifo index, which reflects the mood on the German executive floors, opens the series of numbers on Monday. Experts expect an almost unchanged value for January, although the managers are likely to be more pessimistic about the current situation due to the tightened pandemic restrictions, while the future is more optimistic.
Experts expect little impetus from the Fed’s monetary policy deliberations on Wednesday. Like the European Central Bank (ECB), the US Federal Reserve will keep its feet still and leave the field to the Biden government and its economic aid for the time being, says Commerzbank economist Bernd Weidensteiner.