FRANKFURT (dpa-AFX) - After the recent record-breaking run of the DAX and SDax, the stock market in Germany experienced a bumpy start to the new week. The stock market is likely to "prove susceptible to setbacks," wrote experts at DZ Bank. There are plenty of potential triggers for a downturn in sentiment.
According to the DZ Bank experts, headwinds from the US, especially from the White House, continue to loom. After all, trade talks between the European Union and the United States are still ongoing. Most recently, US President Donald Trump threatened the EU with blanket punitive tariffs of 15 or 20 percent.
Trump is always good for tariff surprises, as the recently announced duties on imports from Brazil and on copper clearly showed, according to DZ Bank. Even if the US president does not implement his maximum demands, there will still be a negative impact on the real economy in the end.
According to DZ Bank, another possible disruptive factor is the cautious monetary policy of the US Federal Reserve. If the consumer price data due on Tuesday points to inflationary pressure caused by tariffs, the Fed will not be able to lower key interest rates as quickly as the market hopes. This, in turn, could cause US government bond yields to rise, which would put additional pressure on the stock markets. Rising yields make fixed-income securities appear more attractive than risky equities.
Robert Greil, chief strategist at private bank Merck Finck, also expressed caution. In his view, the Fed is likely to wait and see, not so much because of the current price figures, but rather because of the future inflation risks associated with Trump's new copper tariffs and possible further industry tariffs. In this respect, the US Federal Reserve is unlikely to lower key interest rates at its meeting at the end of July.
Christian Apelt of Landesbank Hessen-Thüringen (Helaba) believes that the new week will be clearly dominated by economic data from the United States. In his opinion, the effect of the US tariffs will be felt not only in the inflation figures, but also in the retail sales figures due on Thursday. In addition, attention will also focus on producer prices and industrial production on Wednesday and the University of Michigan's consumer confidence index on Friday. However, even after these data releases, the US economic picture is likely to remain ambiguous.
Experts are divided on what impetus the second-quarter reporting season for US companies, which begins this week, is likely to provide. This is traditionally kicked off by the big banks, so the focus on Tuesday will be on JPMorgan, Wells Fargo, and Citigroup, among others. Bank of America, Goldman Sachs, and Morgan Stanley will follow in the middle of the week. Outside the financial sector, the pharmaceutical and medical technology group Johnson & Johnson will be in focus on Wednesday, followed by the conglomerate 3M on Friday.
Given the advance praise on the stock markets, it could be difficult to keep investors happy, Helaba expert Apelt pointed out. Together with the tariff issue, this could cause the stock indices' record-breaking run to suffer a setback.
However, according to Ulrich Kater, chief economist at Dekabank, analysts now expect only slightly higher profits from US companies. This leaves sufficient room for positive surprises and thus for rising prices. /la/niw/he
--- By Lutz Alexander, dpa-AFX ---
