Germany

Stock market 2021: Valuation looks high, is high, can still rise

14,000 points in the DAX in an eventful week. At the moment, despite political adversity in the USA, it is actually easy to be positive about the stock markets. The end of the Corona pandemic seems to be in sight, despite teething problems with vaccinations in Europe. The unpredictable US President Trump is about to leave, the hard Brexit has been avoided and central bankers are pushing ultra-expansionary monetary policy to the extreme. Above all, the central banks‘ often miraculous monetary expansion looks like a huge marketing campaign for all asset classes. In recent weeks, an optimism, as measured by sentiment surveys and investor behaviour, has spread across the financial markets that has not been seen in this form for a long time. A large majority of private investors and financial professionals are „bullish“, i.e. they are betting on further rising prices. The prices of shares, corporate bonds, bitcoin and…

Results of DZ BANK’s 50th SME survey: Covid-19 still a burden

The Corona pandemic has SMEs firmly in its grip. Increased infection figures and a renewed lockdown are preventing the economic recovery from the third quarter from continuing for the time being. The longer the crisis lasts, the greater its impact will be on many companies. It is little consolation that some sectors, such as construction, have so far been largely spared the negative economic impact. Overall, the results of our current representative survey of 1,500 SMEs, which we conducted for the 50th time this fall, show that the mood among SMEs is somewhat more positive than at the time of the first lockdown in the spring. Nevertheless, the current crisis represents the greatest challenge for SMEs since the financial crisis, if not longer. However, SMEs went into the crisis well prepared: according to calculations by the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken BVR (Federal Association of German Cooperative Banks), their…

Corona has spared the housing market, but the regulatory virus is spreading

The corona virus has caused considerable damage to the commercial property market. However, the housing market is largely immune. Appreciation for one’s own four walls has increased during the corona crisis and, in view of attractive financing conditions, is ensuring that purchase prices continue to rise sharply. The rise in residential rents has, however, slowed down. According to the recently published F+B-Wohn-Index, rents under new contracts fell by around 1 percent in the third quarter compared with the previous three months. Alongside the recession and increased unemployment, the improved supply of new housing and the substantial rise in rental levels are likely to have a dampening effect. However, rather than the decline in rents, the regulatory virus could become a risk for the housing market. Instruments such as the rent brake have been introduced to alleviate the consequences of the tight housing markets. However, they have had little effect, because…

Partial lockdown puts economy under pressure

On Wednesday, under the impression of the rapidly increasing number of new corona infections, the Federal Government and Minister Presidents decided to impose a „partial lockdown“ from November 2. Restaurants and several service industries will have to close again for another four weeks, but this time stores will be allowed to remain open – subject to conditions. Schools and daycare centers will also remain open. For many businesses in the catering industry, this is of course the „worst case scenario“, even if generous compensation payments have been promised. Hard weeks are also dawning for the retail trade. Although there is hope that the Christmas business will not be completely lost. But the difficult circumstances are likely to deter many customers from their usual shopping spree and shift even more sales to online retailers. The desired effect of the reduction in VAT will therefore only benefit the stationary retail sector to…

EMU Purchasing Manager: Second wave depresses the mood among service providers – Industry proves robust

Uncertainty is increasing among European service providers due to the rising number of infections in October. The tightening of corona protection measures is causing the purchasing managers‘ index for the service sector to fall significantly. In some countries, the catering and accommodation sectors are noticeably restricted. In addition, there are in some cases night-time curfews. With Ireland and the Netherlands, two countries are already in a kind of lockdown. This leaves traces and puts pressure on the sentiment among service providers. In industry, on the other hand, the sentiment measurement figures may even increase and prevent worse for the overall picture. According to IHS Markit, the comprehensive composite index from both sectors fell from 50.4 to 49.4 points in October. At the beginning of the fourth quarter, the growth prospects for the euro zone thus deteriorate. As there is no end in sight to the rising infection figures, further intensification…

Youth unemployment is becoming a problem in the euro zone

The corona virus caused severe economic setbacks in economies around the world in the first half of the year. In the euro zone, extensive measures were at least able to protect the labor market from more serious distortions. But things are by no means going equally well for all age groups. Particularly in the group of under 25-year-olds, a fairly rapid increase in the EMU unemployment rate has been recorded since the lockdown measures starting in March. One of the reasons for the rapid deterioration in youth unemployment is the fact that companies in Corona times provide significantly fewer training places due to increased uncertainty. This poses a particular challenge to all those who left school after graduating in Corona summer and find it difficult or impossible to find an apprenticeship. In addition, fixed-term employment contracts are hardly ever extended in these uncertain times. The danger here is that these…

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