FRANKFURT (dpa-AFX) - In an environment still marked by uncertainty, the DAX is likely to continue facing challenges in the coming week. The key question is whether Germany's benchmark index can sustainably break through the 25,000-point threshold. At least from an economic perspective, the stock barometer is expected to receive significant impulses from the US and Europe only on Friday. Additionally, with US markets closed on Monday for Presidents' Day, the week is also likely to get off to a quiet start in Germany.
Until mid-January, the DAX had managed to defy geopolitical risks, reaching one record high after another. Since then, however, investors have grown more cautious as some pillars of the recent rally have begun to wobble. For instance, the artificial intelligence boom has also produced potential losers within the sector. Moreover, investors fear that the US Federal Reserve may not lower key interest rates as quickly as hoped this year. This would make equities somewhat less attractive compared to bonds.
"After the recent positive labor market report, the Fed's monetary policy has become even harder to predict," wrote analyst Claudia Windt of Landesbank Hessen-Thüringen (Helaba). As a result, investors are likely to continue seeking a clearer picture of the economic situation in both the US and Germany in the coming week. The main focus will be on Friday.
At the end of the week, the agenda includes the first estimate of US gross domestic product growth for the final quarter of 2025, scheduled for release in the afternoon. According to Windt, it currently appears that the longest partial government shutdown in US history has had less of an impact on the economy than feared.
On Friday morning, the European and German purchasing managers' indices, considered important leading indicators, will be published. "That will show whether investor confidence is beginning to crack or whether optimists in the stock market can feel vindicated," said Ortay Gelen, an expert at independent asset manager Axia Asset Management.
From an investor's perspective, the best scenario, according to the expert, would be if the purchasing managers' indices rise moderately without signaling a boom. Excessive optimism could lead the European Central Bank to delay potential rate cuts, which would be negative for equities. On the other hand, if the indicators are too weak, it would stoke recession fears, particularly hurting cyclical stocks.
Regardless, Russia's war of aggression against Ukraine, tensions in the Middle East, and the unpredictable policies of US President Donald Trump remain key risk factors. Yet Sebastian Raedler, head of European equity strategy at Bank of America, currently sees opportunities, especially in Germany. The German government's fiscal package to stimulate the economy is finally making an impact in the economic data, most notably in the latest order intake figures for German industry.
With regard to the stock market, Raedler recommended overweighting German stocks in portfolios. They have lagged behind the broader European market since May of last year. Weighing the opportunities from the stimulus package against global economic risks, he sees a favorable risk-reward balance.
Meanwhile, some latecomers to the corporate earnings season will also report in the new week. Thursday's agenda is particularly packed, with aircraft manufacturer Airbus < NL0000235190A>, filling and packaging machinery maker Krones, and truck and train brake manufacturer Knorr-Bremse all set to publish their annual results./la/jsl/he
--- By Lutz Alexander, dpa-AFX ---
