Market Insight: When High Interest Rates Become a Problem for Stocks
Although central banks have started to change their monetary policy, stock prices are rising. This is because investors are expecting strong growth, Ulf Sommer thinks.
The German stock market, as represented by the Dax, remains near its record high despite rising interest rates making stocks less attractive. The Dax is only 4% below its record high, and steady corporate profits are supporting the market. The Dax companies are expected to earn a record 127 billion euros in net profit this year, a 14% increase from last year.
A normal upward-sloping yield curve, where long-term interest rates are higher than short-term rates, is also seen as a positive signal for stocks. However, caution is advised as companies' quarterly results and outlooks are set to be released.
Written by urgent.news from Handelsblatt's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
