The Dax on Record Hunt: Year-end Rally Just Beginning?

Last Updated: 6. Dezember 2023By

At the Frankfurt Floor there is a party atmosphere. The proverbial year-end rally is in full swing – and has brought the Dax to a new all-time high on Tuesday, which has since been expanded.

After record on Tuesday: Dax again with all-time high By Wednesday noon, the leading index continued to approach the 16,600 point mark. This puts the index almost 2,000 points above an interim low of about 6 weeks ago. Despite the new highs, the good mood among investors and stock traders remains unbroken: observers expect that further new records can be set.

The Dax is mainly getting a tailwind from rumors about the central banks. It appears that the phase of interest rate hikes has reached a plateau. Most recently, both the Federal Reserve and the European Central Bank left the key interest rate unchanged. At least with regard to the Fed, investors are now expecting a turnaround and that interest rates could soon start to fall again.

Declining inflation gives investors hope In Europe, they are not quite as far yet: because the currency guardians of the Euro Zone only began their interest rate hikes some months later, both the interest rate level and the desired effect on inflation development are not yet as clearly expressed as in the United States.

Nevertheless, the inflation rate has also been developing in a calming direction here: EU-wide the inflation rate was 3.6 percent in October, within the Euro Zone it was even only 2.9 percent after 4.3 percent in September. Thus, the inflation rate is gradually approaching the target set by the central bankers, which is price stability at 2 percent inflation.

Private households have to save From the consumer’s point of view, however, the news is only half as good as it sounds at first glance: on the one hand, prices had already risen a year ago, so that even the now moderate inflation still means a comparatively high price level. As wages and salaries often do not increase in the same way, the net result is often a real wage loss – for what is left over from the net, private households can therefore afford less. On the other hand, food prices are still rising at a significantly higher level than the overall average, so that goods of daily needs hit the account more strongly.

Savings are made at many ends, but probably not necessarily on vacation: after the pandemic made traveling difficult for several years, the tourism industry is now looking forward to a return of vacationers. TUI presented a record result on Wednesday. But it also has to be said that this is partly due to the fact that prices have also risen in the travel sector. The number of passengers has not yet reached the level of 2019 – the last year before the pandemic. Furthermore, holidays are now shorter and less traveled per year.

TUI records record result – share rises double digits All this shows the effects of inflation-diminished household budgets on the travel industry. In the TUI headquarters in Hanover, however, they are pleased with the balance sheet for the latest business year, which ended in September and brought the largest travel company in Europe a surplus of 306 million euros. In the previous year, the bottom line was a loss of 277 million euros. Sales rose by a whopping 25 percent to 20.7 billion euros and also marked a new record in the company’s history. Investors rewarded the strong results with a stock price increase of around 12 percent by early afternoon.