Just three weeks ago, the DAX was trading near 14,700 points, but since then the German benchmark index has climbed more than 1,200 points, thanks in part to strong cues from the US markets, and now it is approaching the 16,000-point mark that has been contested multiple times this year (as of November 17 at around 11 a.m.).

The reasons for the recent DAX rally are manifold, but the hope for an end to central bank interest rate hikes is particularly supporting the index. With this prospect in mind, the DAX has now kicked off an almost abandoned year-end rally. Even if bad news could throw the markets off track at any time, the momentum is in favor of the DAX and Co.

Reasons for the start of the year-end rally The DAX’s nearly 4% gains in this trading week alone speak volumes: optimism is back on the stock exchanges. And this is partly due to the drop in inflation and the belief that the Fed will no longer raise interest rates. On the contrary, the long-deferred hope for interest rate cuts in the first half of 2024 has returned.

This mood is supporting the US indices as well as the DAX in recent weeks. In addition, there are aspects such as the traditionally strong stock market months of November and December, as well as partly very good quarterly reports from large DAX companies. From a chart technical point of view, the direction of the DAX is also clear – the 16,000 points are already firmly in sight.

Where is the DAX heading? In particular, the more favorable outlook on interest rate policy is giving the markets the necessary boost to end the year with a real year-end rally. The scenario of a strong second half of November and a strong December now appears more likely than new setbacks at the DAX.

However, no bad news should dampen the mood in the coming weeks – otherwise the benchmark index may still run out of steam. In the medium term, the prospects are good to very good. After all, the stock market is known to trade the future. As soon as interest rate cuts become more likely, this will usually also support the indices.