The DAX reached a new all-time high in today’s morning trading directly after yesterday’s record high, trading at around 16,580 points (as of December 6th, around 12 pm). The year-end rally, which looked like it had been called off in late October, is in full swing.

In the last trading days of October, the DAX was still struggling with marks of 14,600 or 14,700 points – since then, the German leading index has gained about 13 percent. Above all, the hope of an end to the Fed and ECB’s interest rate hikes have boosted the DAX. As part of the year-end rally, it could now even go higher.

DAX builds on the end of interest rate increases What is the main driver of the current rally? In recent weeks, falling inflation and Fed chairman Jerome have fueled the hope that the US central bank will not make any further interest rate increases. Inflation is also slowly but steadily declining in Europe.

This has immediately sparked speculation about possible interest rate cuts in 2024. Some now expect it to come as early as late spring or early summer. Lower interest rates would be another boost for stocks. However, the current hope also carries risks, because the stock market is known to trade the future.

Many positive news are already priced in today and have made the all-time high possible. On the other hand, that also means that if the Fed or the ECB have bad news for investors in the coming months, it could weigh on the prices.

DAX from all-time high to all-time high? In addition to the expected monetary policy, the timing also plays a role in the strong DAX development of recent weeks. Because especially at the end of the year, many stocks get a nice boost – the current all-time high is therefore more of a logical consequence than a surprise.

Much suggests that the DAX could rise further in the remaining trading weeks of 2023, the index now has no resistance at all. On the other hand, investors should always expect setbacks in such a price rally. The valley of tears between August and the end of October has now been left behind.