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End-of-year rally on the stock market: Is investors' optimism justified?
According to a report from www.capital.de, there is currently a discussion about a possible year-end rally on the stock market. However, optimism may be premature as the rally is based on investors' early spring fever rather than seasonal effects. Spring fever is triggered by the expected cut in interest rates by the Federal Reserve (Fed) and the European Central Bank (ECB), as inflation rates in the US and the Eurozone decline and almost reach target levels. Investors are therefore preparing for falling interest rates. However, this early rally can lead to exaggerated expectations and lead to overvaluation of the markets. The effects could be...
End-of-year rally on the stock market: Is investors' optimism justified?
According to a report by www.capital.de There is currently a discussion about a possible year-end rally on the stock market. However, optimism may be premature as the rally is based on investors' early spring fever rather than seasonal effects.
Spring fever is triggered by the expected cut in interest rates by the Federal Reserve (Fed) and the European Central Bank (ECB), as inflation rates in the US and the Eurozone decline and almost reach target levels. Investors are therefore preparing for falling interest rates.
However, this early rally can lead to exaggerated expectations and lead to overvaluation of the markets. The impact could be to push investors into risky investments and drive up market prices, which could lead to a bubble.
The financial industry must therefore pay attention to how this premature rally affects investors' investment decisions and securities valuations in order to minimize possible risks. It is important to follow market analysis closely and not be blinded by short-term trends.
Read the source article at www.capital.de