DAX reaches record high and indicates falling key interest rates: good news for investors

DAX reaches record high and indicates falling key interest rates: good news for investors

According to a report by www.zeit.de,

The German stock index (Dax) recently reached a new record and is now at 17,003.28 points. This represents an increase of 1.4 percent. This development is closely linked to the signs that key interest rates from the US Federal Reserve Bank will soon fall significantly.

The Fed's forecast suggests further key interest rate cuts that exceed previous interest rate expectations in the market. It is expected that there will be around three rate cuts in 2024, totaling 0.75 percentage points. The European Central Bank (ECB) also plans to announce its key interest rate decision. So far, central banks have tried to counteract high inflation by raising key interest rates.

The prospects of falling interest rates are good news for investors. Equities are becoming more attractive again compared to fixed-interest securities. At the same time, loans are becoming cheaper, making it easier for companies to finance themselves and investments more affordable. The impact of Russia's war of aggression on Ukraine in February 2022 led to a rise in energy prices and triggered high inflation. Inflation has now also fallen significantly in the eurozone.

These developments suggest that the financial market will change in the coming years. Falling key interest rates can lead to increased investment activity and a rise in stock prices, while fixed-interest investments become less attractive. However, it remains to be seen how the ECB and other central banks will react to the changed economic situation.