The German stock market has not benefited from the surprising rate cut in the US. We see this disappointing price reaction as a signal that a rapid recovery of the DAX is unlikely in the coming months – unless there is news about an effective drug against the coronavirus.
The weak reaction of the stock markets to the key rate cut by the US Federal Reserve disappointed. Equity investors had obviously expected central banks to act in a globally coordinated manner. In addition, many investors remember that it was not worthwhile to maintain a high equity exposure in phases when the US Federal Reserve cut its base rate by 50 basis points, for example in 2001 or 2008. After all, many investors are worried about problems in the corporate value chains due to the corona virus – and the central banks can hardly help here.