Weekly Forecast “Using Price Fluctuations as Buying Material”: A German Analyst's Perspective

The market is said to have “come out of the forest, but it's not dry yet.” Further changes are expected, but there are no major adjustments. That's because my fundamental condition is too good.

2024/8/12 Frankfurt (Stock Exchange)

After chaotic days with heavy losses and strong backlash, things seem to have more normalized in the new week. “Investors' concerns have been somewhat resolved,” explains Heraba analyst Claudia Vint. Standard stocks are being bought again. “As long as concerns about the US recession are exaggerated, the stock market should be able to calm down.” Commerzbank also believes that sentiment will continue to calm this week. “A return to fundamentals is underway,” explains Torsten Weinert. The market “has come out of the crisis, but it is still not completely dry.” ”Seasonally, summer is one of the weakest periods, and concerns about a recession seem exaggerated, but US growth deceleration has already begun.Also, there are still 5 weeks until an optimistic Fed meeting. ”There is a high possibility that instability will continue during this period.」

The DAX, which fell to 17,000 points a week ago, rose to 17.800 points on Monday morning after being 17,723 points when trading closed on Friday. The US stock market closed with a slight increase on Friday.

According to Decabank, this adjustment was triggered by concerns about the US economy, but the real reason was a necessary adjustment in sentiment in individual market segments. “In particular, technology companies and platform companies that dominate the market are under pressure to make adjustments,” explains chief economist Ulrich Kater. For the stock market as a whole, the possibilities for adjustments are basically limited. “Global growth has been maintained, corporate profits have risen slightly, central banks have lowered interest rates, and valuations are below the long-term average due to price adjustments,” Kater explains. Therefore, as price fluctuations increase, regular purchases should be made. DAX19,000 points after 6 months、20,000 points after 12 monthsI'm expecting it to reach.

According to the fund company DWS, despite the bright outlook for artificial intelligence, this adjustment was premature. However, it is clear that a wide range of diversified investments is important in stock investments. “Investors have been investing in major technology stocks for the past 2 years and have achieved great success without diversification,” explains equity fund manager Madeleine Lorner. However, in the long run, wise diversification of investments within the equity asset class is essential. Stock picking, that is, targeted selection of individual stocks, is becoming important again. For example, only some parts of the US market have high valuations, and there are also things that are interesting from a valuation point of view, such as medical technology and transportation. “There are also exciting sectors unrelated to AI, such as the aerospace industry,” Lonner says.

8/13 (Tue

11:00 a.m. Germany August ZEW Business Confidence Dekabank explains that Germany is by no means doing well. Geopolitical uncertainty and weak economic indicators cast doubt on the expected recovery in the third quarter. This is reflected in the decline in survey indicators, and it will be seen again in the ZEW business trend survey.

8/14 (Wed)

2:30 p.m. America: July Consumer Prices. According to Commerzbank, inflation in the US has calmed down quite a bit, and this figure confirms this.

8/15 (Thursday)

4:00 p.m. China: July Industrial Production. Industrial production continues to be the most important pillar of the Chinese economy, writes Decabank. The annual fluctuation rate for July probably increased slightly due to base effects. However, considering weak demand trends, it is not expected to accelerate in the next few months.

2:30 p.m. US retail sales for July. According to Decabank, US retail sales probably increased relatively strongly compared to the previous month. This was shown by advance forecasts and a significant increase in car sales.