Stefan Winter on the uncertain market situation and central bank decisions

It wasn’t quite enough. The Dax was just a few silly points away from 19,000. With the momentum left over from the previous week, it started ambitiously on Monday, and since Tuesday morning the record has stood at 18,990.78 points. Considering the environment, that calls for a correction, and that is what happened. It went down gradually from day to day until it reached 18,301 points on Friday evening – a loss of around 3.5 percent in four trading days.

Nvidia as a symbol of helplessness

Nvidia is certainly not a representation, but it is symbolic of the current confusion in the market – and is also rubbing off on it. The chip developer’s share price swings wildly back and forth between AI hype, fears of a bubble bursting and the search for a realistic valuation. In the past four weeks, the share price initially rose by 30 percent and then quickly fell just as steeply. The company’s valuation on the stock exchange changes up and down by a three-digit billion amount.

Central banks in the center

It will probably have to be autumn for a trend to emerge. Then you will also see the central banks more clearly. In the USA, the question is whether the economy is merely cooling down or will collapse. In Europe, there is still no final certainty as to whether inflation has really been defeated with the 2.2 percent it has reached or whether it will flare up again.

The labor market data from the USA on Friday afternoon showed how fine the line is. Firstly, they helped the previously weak stock markets to recover, because on the whole, things looked like the hoped-for mix: Demand for labor is weakening, but is still quite robust.

Food for economic concerns

On closer inspection, however, the figures were below expectations, especially since statisticians had revised values ​​from previous months downwards. This caused nervousness. We are hearing more and more warnings that the US labor market can slide very quickly if the trend turns downward. At the same time, there is growing uncertainty about how the Fed will react to this.

Most economists expect a reduction in key interest rates of 0.25 percentage points on September 18. Will that be enough to keep the US economy going? Or will the Fed be forced to make a big step of 0.5 points? And would that actually be good or bad news? Interest rate and economic concerns have a lot of fuel again. The US markets turned negative in the afternoon, and the DAX recorded a daily loss of 1.5 percent shortly before the close.

Stefan Winter is the senior business editor of the RND. He writes weekly about the stock market, financial markets, the rise and fall of prices – and the companies behind them.