Märkte Insight: Wann die hohen Zinsen zum Problem für Aktien werden

The constantly rising interest rates have posed a problem for stocks, shifting the narrative from their previous allure. Once, the high returns in equity markets during the eight-year zero-interest period were attributed to potential capital gains and relatively secure dividends. Companies thrived with affordable new debt and refinancing old debts at lower interest rates, driving stock prices upward.

However, this narrative no longer holds true, necessitating a reassessment. Rising interest rates make new borrowing more expensive, and stocks increasingly unattractive. For reputable Dax companies, the interest rates are around four percent, while secure government bonds offer three and a half percent. The average return for Dax stocks is only three percent, far below the dividends they yield.

The traditional slogan "Dividends are the new interest" has lost its relevance. Despite concerns over these negative conditions, the stock market remains unalarmed. The Dax is currently four percent below its record high, and the US Federal Reserve's recent rate hike and potential future increases have had minimal impact. The robust corporate earnings of Dax companies, projected to generate 127 billion euros in net profit this year, are a contributing factor.

This represents a 14 percent increase from the previous year and the highest level ever recorded. Similar record-breaking earnings are being reported in the US. The rising interest rates are also contributing to the strong market trend. However, the rising interest rates themselves provide a favorable signal for stock investors.

Long-term bond yields, spanning ten or thirty years, currently offer significantly higher returns than short-term papers in Germany, Europe, and the US, indicating a normal upward-sloping yield curve. Investors demand a higher return for tying up their capital long-term and bearing associated risks. For stock investors, this is fundamentally a positive sign.

Historically, stock markets have often faced pressure when long-term interest rates fell below short-term rates, a situation that often signaled investors' expectations of slowing economic growth and declining corporate earnings. A downward-sloping yield curve signals that investors anticipate falling interest rates, often due to expectations of economic slowdown and declining corporate profits.

While this is a warning signal for stock markets, it is not currently evident. Nonetheless, caution is advised amidst rising interest rates. If Dax companies release their balance sheets for the concluded quarter and provide an outlook in the coming weeks, investors should closely monitor them. Persistently rising inflation rates and interest rates are not conducive to long-term optimism for companies and their shareholders.

This could be due to companies' inability to pass on rising prices for inputs and energy effectively, or because financing conditions for companies deteriorate, making debt a problem due to rising interest rates.