Stock markets: Why it's all about interest rates

Stock markets: Why it's all about interest rates

According to a report by finanzmarktwelt.de, the development of the stock markets currently depends almost exclusively on expectations of future interest rate cuts. US stock markets and the DAX fell on better-than-expected US retail sales, reducing the likelihood of an imminent interest rate cut by the Fed. The probability of a rate cut in March is currently only estimated at 50:50, whereas last week it was over 80%. This has led to rising yields in the US and Europe and a strengthening of the dollar. Big Tech stocks also posted losses on Wall Street.

Given these developments, as a financial professional it is important to consider that expectations of future interest rate cuts or increases have a significant impact on stock markets. A lower probability of a rate cut could lead to rising yields and a strengthening of the currency, while a higher probability could have the opposite effect. Investors should therefore keep a close eye on central banks' interest rate policies and plan for possible effects on their portfolios.

In addition to the developments mentioned, evidence from the video shows that both the stance of the European Central Bank (ECB) and the assessment of government interventions by experts such as Javier Milei are other factors that could influence financial markets.

It is important that financial professionals and investors carefully analyze current market trends and potential future developments to make informed decisions. Interest rate policy, economic indicators and the assessments of central banks are key factors that can significantly influence the further development of the financial markets.