In previous years, the question was always asked in mid-October whether there could be another year-end rally this year. In the time before the corona crisis, they relied on good business figures for the third quarter, which often resulted in raised forecasts for the full year. And because quite a few fund managers use the last three months of the year to push their total return a little higher, the stock market is often optimistic at this time.
But the corona pandemic has also changed this annual ritual. With a Dax that has been trading at over 13,000 points again for a few days, the vast majority of stockbrokers are satisfied for the time being. A good 500 points are still up to the all-time high.
But that’s not the focus at the moment. It is enough that the German benchmark index has leveled off at the current level for a good three months with only occasional fluctuations.
A higher Dax level could possibly be interpreted as high spirits. Everyone knows that the economic outlook looks pretty bleak. The rapidly growing number of new corona infections has recently reinforced this trend.
If the prices were to rise significantly again in such an environment, the potential for a fall would be all the higher if there was another setback. Anyone who nevertheless counts on a year-end rally as usual is currently causing the broad mass of investors to feel uncomfortable.
Because there is plenty of potential for setbacks in the coming weeks until the turn of the year. Many industries are currently adjusting to the fact that the hoped-for turnaround will probably take longer than expected. In many places, companies would be happy if business stabilized in the coming year. In addition, there are a lot of political imponderables such as the US election in a few weeks, Brexit at the end of the year or the ongoing trade conflict between the USA and China.
In such an environment, many rightly view a year-end rally as a disconnection from reality. There are many indications that the stresses of the crisis will continue well into the coming year.
In any case, the euphoria that could be heard in some places until late summer has vanished. In a year in which Christmas markets and carnivals are canceled, this could also apply to sharply rising share prices at the end of the year.
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