2023-10-06 17:31:16
No, it wasn’t a great week on the stock markets. Hopes that the US Federal Reserve would soon cut interest rates again were dashed on Monday following statements from several central bankers. There were three opinions that, taken together, sent a clear signal to the markets: interest rates in the largest economy will not fall that quickly.
Already on Tuesday, unity was celebrated in Germany, but trading in Frankfurt was still taking place and the Dax stock market barometer was dangerously approaching the 15,000 point mark, and at the opening on Wednesday it even fell below this. The market correction, which began in August when the Dax reached over 16,000 points, continued not only in September, but also in October, which was known to be a better month for the stock markets.
Although the leading German index has remained above the 15,000 mark since trading on Wednesday, company shares have lost a lot of their attractiveness.
High returns in the USA
This is not least due to the sharp rise in yields on the bond market. In the USA, 5 percent is definitely possible, which means a real interest rate. In the lower interest rate environment in the Eurozone it is 3 percent, which is not yet enough for a real interest rate.
But should stocks really be written off now? The opinions are divided. Swisscanto, the fund manager of the Swiss cantonal banks, believes that the restrictive monetary policy environment will act as a braking factor for the stock market in the foreseeable future. Together with the ongoing crisis in the Chinese real estate market, this is leading to a difficult environment for stocks. Cyclical stocks corrected more strongly, while defensive stocks limited their losses. Small caps that are more sensitive to the economy would also come under greater pressure than the market as a whole.
The fund manager from Switzerland is even more skeptical about the European market: A mild recession that already occurred in the summer and will last until next year has not yet been sufficiently priced in. “We expect that the recession we forecast in the euro area will be accompanied by increased volatility and further price declines in European stocks in the medium term,” write the analysts from Switzerland.
DZ Bank sees it differently: The DAX has become a real crisis bargain and is pricing in the “perfect storm”. The price-earnings ratio slipped to a level that had previously only been observed during real economic crisis phases. Especially in the upcoming reporting season for the third quarter, DZ Bank sees positive surprise potential that could trigger a significant price recovery.
Bank shares at a glance
And when it comes to bargains, bank stocks are worth keeping an eye on, advises asset manager GAM: “The return to historically normal interest rates and yields is of immense importance for the banking sector, which is highly exposed to rising interest rates,” argues Niall Gallagher, Investment Director at GAM.
Hanno Mußler Published/Updated: , Recommendations: 10 Markus Frühauf Published/Updated: , Recommendations: 4 Daniel Mohr Published/Updated: , Recommendations: 12
The valuations of European banks, which came under some pressure at the beginning of the year due to the negative sentiment towards weaker US regional banks, are currently very cheap in both absolute terms and in relation to the market compared to history. The Dax is also cheaper this week. He lost around one and a half percent over the course of the week.
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