DAX rally: no crash in sight yet

Profiting from strong stock markets overseas, Germany's DAX-30 index climbed to yet another all-time high in its 30-year history.

Only an hour after trading started, the blue-chip index was up well over 1 percent to reach 13,361 points, after clearing the psychologically important 13,000-point threshold in mid-October.

The DAX is an export-oriented index where global players such as carmaker Volkswagen, Deutsche Bank and IT firm SAP are listed. This is important in the context of a continuously weak euro against the greenback which makes German exports to overseas destinations cheaper and hence more competitive.

Uncertainties brushed aside

The renewed jump in share prices came despite the US central bank's expected interest-rate decision after the end of trading in Europe plus uncertainty over who will become the Fed's new chairperson.

Yet most analysts agree that any talk of the bubble bursting is premature. After all, the European Central Bank (ECB) only last week announced it would extend its massive bond-buying program by nine months. As of January 2018, it will spend €30 billion ($34.9 billion) on asset purchases per month (down, though, from the previous €60 billion per month).

Interest rates are to remain low for quite some time to come, which is also going to support the stock market further. That's because investors are still extremely hard put to risk all their money on anything else but shares, with yields on bank deposits laughably low right now.

World economy in good shape

What's more — cyclical developments are absolutely favorable, with the export-oriented German economy profiting from a sustained global economic upswing.

MM Warburg Chief Economist Carsten Klude said "all OECD member and almost all emerging markets have been forecast to see their economies end the year with a positive growth rate."

Like many others, he concluded that a stock market crash is not in sight and could only be triggered by unforeseeable political events.

With so much money being pumped into markets right now, "geopolitical risks are being increasingly ignored by investors," said NordLB's investment strategist Tobias Basse. And Martin Hüfner from asset manager Assenagon doesn't see any writing on the wall either, insisting that "the German economy is going full steam ahead, and that's not going to change any time soon."

hg/tr (AFP, Reuters, dpa)