FRANKFURT (dpa-AFX) – After a lethargic September, the DAX has made an exemplary start to October. Quite a few now hope that this will perhaps lay the foundation for a year-end rally. The hope of further US interest rate cuts is providing new momentum on the stock markets, commented financial market expert Andreas Lipkow. Shares related to artificial intelligence (AI) are currently in high demand. The megatrend recently received a boost from the news that ChatGPT provider OpenAI has reached a valuation of around half a trillion US dollars in the placement of employee shares with investors.
The “impressive” forecasts of some Wall Street banks for the market-wide US index S&P 500, which apparently considered the high valuations to be the new norm, “document a firm belief in the infinite possibilities of artificial intelligence,” stated Robert Halver, head of capital market analysis at Baader Bank. This not only benefits semiconductor giants such as Nvidia — providers of cloud services and AI infrastructure, software and service companies, and data storage providers are also benefiting from the high demand for data center capacity.
The much-heralded “shutdown” in the US, which has now actually occurred, has so far had no impact on the renewed positive sentiment on the German stock market. This had recently helped the DAX exceed the 24,000-point mark for the first time in a month. So far this year, the leading German index has recorded a price gain of well over 20 percent. The record high of 24,639 points from July is increasingly coming back into focus.
However, it remains to be seen whether the momentum will continue. Due to the work stoppage at a number of government agencies, no further economic data will be published by US government agencies for the time being, according to the statistics departments of the Department of Labor and the Department of Commerce. This also applies to the monthly labor market report, which is actually due this Friday and is an important factor for the monetary policy of the US Federal Reserve.
On the financial markets, a further 0.25 percentage point cut in the Fed’s key interest rate at the end of October is considered virtually certain. However, without economic data, both monetary policymakers and investors lack “an important basis for decision-making,” wrote analyst Birgit Henseler in DZ Bank’s capital market outlook. In addition, a shutdown is “a visible symbol of political dysfunction and reminds investors that US politics cannot even reliably perform basic administrative tasks.” Given high stock valuations and low risk premiums, this could weigh more heavily on sentiment than in other market phases.
However, Henseler, like other experts, pointed out that the stock markets have ultimately coped with shutdown phases in the past without any problems. This also applies to the longest shutdown to date, which lasted more than a month at the turn of 2018/19 during US President Donald Trump’s first term in office.
Capital market strategist Jürgen Molnar from the trading house Robomarkets pointed out that the latest US labor market data, such as the monthly report on the private sector by the service provider ADP, had all been weak, which at least did not argue against a further interest rate cut. “If the Fed takes the weaker growth caused by the government shutdown into account in its decision, investors may even see something positive in the shutdown,” he said. Molnar also pointed out that investors were ignoring other risks, such as US tariff policy and military conflicts, at the start of the strongest stock market quarter of the year.
On the corporate side, the news situation is clear. On Wednesday, copper group Aurubis is holding a capital markets day. Two days later, the quarterly report of pharmaceutical packaging manufacturer Gerresheimer and the Volkswagen Group’s delivery figures for the third quarter are on the agenda.
In the absence of US data, there is even less economic news on the horizon that could move prices. It is currently unclear when the missed publications will be made up for. In Europe, purchasing manager data from the service sector and inflation data from the eurozone are scheduled for release this Friday.
