Despite all the lockdowns, many stock market indices are currently rushing from record to record. Even if there are reasons for investors to rush to buy stocks, fears of an impending crash are growing.
By Victor Gojdka When stock market trader Oliver Roth comes to his workplace in the Frankfurt Stock Exchange in the morning, he walks past the large, black price board every day. Roth has been in business for the securities trading house Oddo Seydler for years. Little can scare him. But Roth gives thought to the fact that the German leading index DAX is at more than 15,000 points – higher than before Corona. What he could say after three decades on the stock exchange: “The trees don’t always grow into the sky. On the stock exchange, too, there will be other times again,” says Roth.
Record hunting with doubts
Many dealers currently have such doubts on the floor. Outside, in front of the stock exchange, there is a partial lockdown. Inside, on the traders’ financial computers, there is one record after another – regardless of whether it is the German DAX or the American Dow Jones index. Folker Hellmeyer from the fund company Solvecon can explain that. He says: Mainly large corporations are listed on the stock exchange – and they do a lot of business with China, where there has long been no lockdown. “We can see that large parts of the economy are already doing really well,” says Hellmeyer. The profits were bubbling up. “That will also become clear in the current reporting season. That is also and especially the industrial sector. So from there: no overheating.”
Investors fear rising interest rates
But one concern remains, especially when the economy is running smoothly. Then prices could rise sharply in a few months. Central bankers could then raise interest rates as an antidote. And when interest returns, stocks automatically become less attractive. The well-known US finance professor Jeremy Siegel also fears this. “In the end, the central bank will have to step in and say we have a little too much inflation,” Siegel told the US broadcaster CNBC. “But now I’m not yet skeptical, the bull market is still going.” The bull market? In stock exchange jargon, the term stands for rising prices. But the first doubts are there: In a survey by Bank of America, suddenly rising interest rates are the most feared scenario for equity investors.
Impending bubble among young tech companies
Another concern: a suspicious number of hip tech start-ups from the USA suddenly make the leap onto the floor. Exchange trader Roth finds clear words for this: “This is definitely a bubble,” he says. That reminds me a “bit of the New Market at the turn of the millennium, investing in a technology that is initially just a headline. And at some point it will be said: The Kaiser has no clothes on.” But Roth also says: They are still just small stock market players. They are not included in the major indices anyway. On the contrary: tech giants like Amazon and Co. could continue to play their strengths here, says Christian Kahler from DZ-Bank. The big technology stocks – be it Facebook, Google, Amazon – are doing surprisingly well. “They are on the way solid in terms of profit growth,” says Kahler. “These are the titles that should continue to drive the overall market for the next few years.” Because these values now stand for almost 25 percent in the US benchmark index S&P 500. How they are doing sets the tone on stock exchanges around the world. Like so much on the stock market, you can see it as an opportunity – or a risk.
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