FRANKFURT (dpa-AFX) - The coming week not only marks the start of a new trading week for the Dax, but also the second half of the year. The focus is therefore not only on the next few trading days, but also on the medium-term outlook. This is all the more true as there are several upcoming events whose significance extends far beyond day-to-day business. First and foremost are the elections in France at the weekend.

The saying that political bores have short legs could prove to be inaccurate this time. The change in the political landscape, as indicated by the first projections after the polls closed on Sunday, has significance far beyond France. In the first round, the right-wing nationalist Rassemblement National (RN) under Marine Le Pen is ahead. President Emmanuel Macron's centrist camp came third behind the left-wing alliance Nouveau Front Populaire.

Metzler chief economist Edgar Walk described the situation before the elections with regard to the RN and the strong left-wing alliance as follows: "Both camps want to roll back reforms and hand out more social benefits, which could increase the current deficit from around 5.0 percent of gross domestic product (GDP) to a worrying 9.0 percent."

This would not go unnoticed on the financial markets. The weakness of the French stock market and developments on the bond market have already provided a foretaste. "The spread between French and German government bonds has widened, reflecting the growing mistrust of investors," says Walk. "These are predominantly foreign creditors - with more than 50 percent of French government bonds held - who sell the bonds more quickly than domestic creditors when the news is bad." Market distortions would therefore be possible.

Walk is counting on the French president's veto power to prevent spending excesses. However, there is not much to be gained from this. "A feared increase in the deficit is therefore unlikely to be implemented by the election winners - but neither would it be possible to implement necessary austerity measures," warns the economist.

But it is not only the elections in the neighboring country that are good for turbulence. The US presidential elections are also casting their shadows ahead. This is all the more true as the question is no longer just 'Biden or Trump' after the latest TV duel. After the appearance of the incumbent US President, which has fueled questions about his health, experts no longer consider a short-term change of candidate among the Democrats to be out of the question. However, this would inject additional uncertainty into the US election campaign, which is not normally good for the stock markets.

Investors could take the uncertainties as an opportunity to continue to cash in on the hot US technology stocks. Capital market strategist Jürgen Molnar from broker RoboMarkets sees the performance of US semiconductor manufacturer Micron as a warning signal. "Continued dynamic growth in sales and profits and, according to the company, sold-out memory chips were not enough for investors; they sold the shares," says Molnar. "When good news no longer reaches the stock market, the market is overbought."

This means that the signs for the DAX are anything but good. "After a nine percent rise in the first half of the year and only a slight correction so far, it could be difficult for the market to escape the summer slump," predicted Molnar. "Especially when Wall Street is also showing signs of selling for a change."

There are also warning signals from the domestic economy. The economists at Landesbank Baden-Württemberg (LBBW) do not see the latest Ifo business climate index as a one-off slip, but as a bad omen. "The business climate had already slipped marginally in May. What's more, the situation component is treading water and expectations have deteriorated again," according to a current assessment. This is also likely to make itself felt in the coming months. "Economic output is likely to be close to stagnation in the second quarter and there is also a lack of imagination for better times in the third quarter," says LBBW.

All of this has left its mark on the chart. "With its double sell signal, the Dax has only just entered a new consolidation phase and consolidation range," noted technical analyst Marcel Mussler. Investors should therefore at best prepare for a directionless fluctuation, with Mussler citing a trading range between 17,626 and 18,567 points. Breakouts above or below one of these levels would then be decisive for the further development, although the technical analyst considers an upward rise to be quite unlikely.

Inflation data at the start of the week could also set the tone for the coming week. "In principle, the inflation trend in Germany and the eurozone as a whole remains downward, which should give the ECB further scope to cut key interest rates over the rest of the year," noted Robert Greil, chief strategist at private bank Merck Finck.

There are also some important stimuli from the USA. The ISM Purchasing Managers' Indices for June and the minutes of the latest Federal Reserve meeting are on the agenda. They are likely to be scrutinized for indications of future US monetary policy, as is the most important indicator at the end of the week, the labour market report for June. If it brings the hoped-for slowdown, hopes of interest rate cuts could be rekindled - and thus brighten the rather gloomy outlook for the Borsen./mf/tih/mis/nas

--- By Michael Fuchs, dpa-AFX ---