The new stock market week once again brings numerous economic data and corporate balance sheets.

According to the experts, only then will it become clear whether investors' continued interest rate optimism and the recent record highs in the Dax and S&P are justified.

According to statements by Fed Chairman Jerome Powell last week, investors left behind their hopes of an interest rate cut by the Fed in March. Monetary easing will come, but a move downwards at the very next meeting is "unlikely", Powell said on Wednesday. The monetary authorities needed more clarity on the development of inflation and the economy. On the futures markets, the probability of a rate cut in March is currently estimated at only 35 percent. Before the Fed meeting, it was 65 percent. However, interest rate cuts at the next meetings are still considered a foregone conclusion. Positive economic data and corporate balance sheets soon brightened the mood again after a brief wave of selling. "After all, both equities and bonds went up and even gold said goodbye with a strong weekly gain," wrote Helaba's experts. "So who is wrong?"

The Dax jumped by up to 0.9 percent to a new all-time high of 17,004.55 points on Friday following strong balance sheets from US tech giants Amazon and Meta. Following the publication of the latest US labor market data in the afternoon, however, it limited its gains. At 16,946 points, it was more or less at the previous week's level.

FOCUS ON GERMAN INDUSTRY AND CHINESE INFLATION

In terms of economic data, the German economy is in the spotlight. The week opens with foreign trade data for December. Investors will then turn their attention to German industry with data on orders on Tuesday and production on Wednesday. Experts surveyed by Reuters expect stagnation or a decline of 0.1 percent.

"Industry is likely to continue to hold back the German economy at the start of the year - even if the mood in industry has recently brightened somewhat according to the Ifo survey and purchasing managers' index," says Commerzbank economist Ralph Solveen. "The only reason we are not expecting a further decline in orders is because the always very volatile orders in the 'other vehicle construction' sector - with aircraft, etc. - were comparatively low in November and we are not expecting a further decline in orders. - were comparatively low in November and we therefore expect a countermovement here.

On Thursday, the focus will shift to China. The inflation data for January should show whether the deflation in the People's Republic has continued at the beginning of the year. Economists surveyed by Reuters expect consumer prices to have fallen by 0.5 percent. They had already fallen for the third month in a row in December - by 0.3 percent compared to the same period last year. The development appears to be economically dangerous: if consumers hold back on consumption in anticipation of further falling prices, the entire economy will be dragged down in a maelstrom of falling prices, falling wages and reluctance to invest.

FIVE DAX COMPANIES PRESENT FIGURES

Meanwhile, the balance sheet season continues. Five DAX companies are among those publishing their financial reports. On Tuesday, chip manufacturer Infineon and diagnostics company Qiagen will present their business figures. The results of Deutsche Börse and energy technology specialist Siemens Energy are due in the middle of the week. On Thursday, the conglomerate Siemens opens its books. In the USA, McDonald's, Eli Lilly, Ford, PayPal and PepsiCo, among others, present their figures.

(Edited by Olaf Brenner. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).

- by Zuzanna Szymanska