The DAX And ​​Dow Chase Of Records: Is The Stock Market Threatened To Crash?

Despite all the closings, many stock market indices are currently accelerating from one record high to another. Even if there are reasons for investors to rush to buy shares, fears of an impending crash are growing.

When stock market trader Oliver Roth comes to work on the Frankfurt Stock Exchange in the morning, he passes through the big black board every day. Ruth has worked at Oddo Seydler stock trading house for years. Little could frighten him. But Roth is considering the fact that the leading German DAX index has crossed 15,000 points – higher than it was before Corona.

What he could say after three decades on the exchange: “Trees don’t always grow in the sky. On the stock exchange too, there will be times again,” says Roth.

Hunting record with doubts

Many traders currently have such doubts on the ground. Abroad, in front of the exchange, there is a partial lockdown. Inside, on traders’ financial computers, there is record after record – regardless of whether it is the German DAX or the US Dow Jones.

Volker Hellmayr of Solvecon can explain this. “Big companies are mainly listed on the stock exchange – and they’re doing a lot of business with China, as there hasn’t been a shutdown long ago,” he says.

“We can see that large parts of the economy are already doing well,” says Hellmayr. Profits were increasing. “This will also be evident in the current reporting season. This is also the case, especially the industrial sector. So from there: there is no warming.”

Investors fear higher interest rates

But there remains one concern, especially when the economy is running smoothly. Then prices can rise sharply within a few months. Central bankers could then raise interest rates as an antidote. And when the interest returns, the stocks automatically become less attractive.

Well-known American professor of finance Jeremy Siegel fears that, too. “In the end, the central bank will have to step in and say we have very big inflation,” Siegel told US broadcaster CNBC. “But now I’m not skeptical yet, the bull market is still going.”

Bull market? In stock market terminology, the term refers to a price increase. But the first doubts are there: In a survey conducted by Bank of America, a sudden rise in interest rates was the most feared scenario for equity investors.

An impending bubble among young tech companies

Another concern: A suspicious number of high-tech startups from the United States have suddenly jumped to the ground. Exchange trader Ruth finds the obvious words for this: “This is definitely a bubble,” he says. This reminds me a little of “the new market at the turn of the millennium, investing in technology that is initially just a headline. At some point it will be said: The emperor does not wear clothes.”

But Ruth also says: They are still just small players in the stock market. They are not included in the main indicators anyway. On the contrary: Tech giants like Amazon & Co. can continue to play their power here, says Christian Kahler of DZ-Bank. Big tech stocks – be it Facebook, Google, or Amazon – are doing surprisingly well. “They are on their way solidly in terms of profit growth,” says Kahler. “These are the headlines that should continue to drive the market as a whole over the next few years.”

Because those values ​​now account for roughly 25 percent in the US benchmark S&P 500 index. The way you do it is setting the tone in stock markets around the world. Much like the stock market, you can see it as an opportunity – or a risk.