The last, abbreviated trading day of the strong equity year 2023, closed the leading German DAX index in positive territory.
The DAX closed the last trading day of the year at 16,751.64 points, or 0.3 percent higher. It gained slightly at the opening and then continued to gain, but without major fluctuations.
XETRA trading ended this Friday at 2 p.m. As in previous days, selling was again very weak as many investors were not active between years. The message situation was also almost non-existent and many players were probably no longer participating in trading.
Hopes for interest rates ensured a good year for stock markets
With a gain of a good 20 percent, the leading German index has had a rich but also profitable year Development of key interest rates was the most formative topic. Expectations that key interest rates will soon fall again have fueled stock markets on both sides of the Atlantic in recent weeks, pushing them to record highs. The leading German index reached an all-time high of 17,003.28 points in mid-December. However, the DAX has run out of steam in recent days and new records were set in New York on Thursday.
The stock market in 2023 managed a number of crises
However, 2023 also had a number of crises to overcome: the first one hit the stock markets in March and brought back bad memories of the 2008/09 financial crisis. Collapse Silicon Valley Bank (SVB) triggered a regional banking crisis in the US. However, the joint intervention of the central bank quickly extinguished the source of the fire and prevented its spread to Europe. In addition, Switzerland and its central bank also contributed to this SNB as the “out of the hat” bailout of Credit Suisse – via a takeover by a competitor UBS – calm the markets.
Things went up fairly steadily again until interest rate worries and then interest rate hopes drove the DAX first to an interim low and then to a record high in July. In the next three months, everything went almost exclusively downhill. Concerns about the global economy dictated the direction. The heavily indebted Chinese real estate giant also came into the spotlight China Evergrandewhich filed for Chapter 15 bankruptcy protection in the US in mid-August.
The stakes increased in October, when fears of an escalating war between Israel and the Islamist Hamas emerged. The DAX fell to a temporary low of around 14,800 points. From there, the rally finally started, which was recently driven by the expectation of a drop in key interest rates and to which the DAX owes its significant year-on-year increase.
Investors face a reality check in 2024
The new year will see a reality check for year-end rallies in the stock and bond markets, wrote Thomas Altmann, portfolio manager at QC Partners. “Then it remains to be seen how much risk investors take on the stock market at the beginning of the year. And whether they are really ready to invest larger amounts at current price levels.”
Pictet Asset Management is optimistic about the coming year. European stocks are expected to perform well and outperform their US counterparts. Profit expectations for Europe are “much more cautious” than those in the US, leaving less room for disappointment. The general reluctance towards eurozone stocks is likely to reverse as the economy recovers. The asset manager can see it Price-earnings ratio in Europe at 12, compared to 19 in the US. Such a difference is “unprecedented”.
The editorial team of finanzen.net / dpa-AFX / Reuters / Dow Jones Newswires