Share prices have finally experienced a slight setback. After the DAX had marked a record high at the beginning of the month, it has lost four percent since then. In this context, there can be no talk of a genuine consolidation – or even a correction. Since 1975, the DAX has corrected intrayear from one high to the next low by 18% in average terms. Applied to the current parameters, even a correction from the annual high of 13,478 points to a good 11,100 would still lie within these historical statistics.
We do not expect equity markets to fall that strongly. Rather, the current development appears to be a direct response to the evident „overheating“ of share prices and economic leading indicators. Profit taking is now on the agenda. This could prove all the greater, the more quickly investment funds exhaust their risk budgets for equity mandates or the lower the cash allocations turn out to be.
Corporate profits have risen to levels not seen for years. Profit growth should continue in 2018 and interest rates will also remain very low. This signals good prospects for equity markets in 2018. Should investors therefore continue to sell equities in the days ahead, buying opportunities could soon arise. But it is still too early for that at the moment.