FRANKFURT (dpa-AFX) – Hovering near its record high, the DAX is set to be influenced in the coming week not only by geopolitics and earnings season, but also by central banks. As October draws to a close, the stage could be set for a potential year-end rally, with the US Federal Reserve (Fed) kicking off a series of key decisions on Wednesday, followed by the European Central Bank (ECB) and the Bank of Japan on Thursday.

Michael Krautzberger of asset manager Allianz Global Investors, echoing other experts, expects the Fed to cut its key interest rate by 0.25 percentage points. This would keep the central bank on its path of “precautionary insurance rate cuts.” DWS economist Christian Scherrmann believes the US monetary authorities are “essentially flying blind due to the government shutdown,” as many overdue economic data releases are still outstanding. He argues that risks to employment remain greater than inflation risks. On Friday, US consumer prices rose less than economists had expected in September.

No rate cut is expected from the ECB. “A change in monetary policy at the October meeting would be a major surprise,” says DZ Bank expert Christian Reicherter. Market speculation is instead focused on a possible further rate cut next year. Therefore, ECB President Christine Lagarde’s accompanying statements could be significant. Reicherter expects her to highlight the environment of high uncertainty and to emphasize that the rate path is not predetermined.

Geopolitics will also remain critically in focus in the coming week: While a ceasefire in the war in Ukraine remains out of sight, developments in the trade dispute could occur in the days ahead. US President Donald Trump, in connection with a dispute over an allegedly misleading Canadian advertising campaign regarding tariffs, has announced additional tariffs of ten percent against Canada. With China, however, there has been a rapprochement in the tariff and trade dispute. On Thursday, a meeting between Trump and Chinese President Xi Jinping is scheduled to take place in South Korea. According to a transcript of an interview with CBS News, US Treasury Secretary Scott Bessent said he did not want to preempt the heads of state, but he assumed that the US threat to impose additional tariffs on Chinese imports starting November 1st was off the table.

Helaba analyst Claudia Windt wrote on Friday that, given the geopolitical backdrop, investors should actually be “moving to a safe haven.” However, she attributes their recent boldness in part to some positive influences from the US corporate earnings season.

Over the course of the week, the earnings season even managed to “steal the show” from the Fed, according to her colleagues at Landesbank LBBW. They particularly pointed to Wednesday, when Alphabet, Meta, and Microsoft will all report results after the US market closes, followed by Amazon and Apple on Thursday. Thus, five of the most valuable US companies will be publishing their results.

The LBBW experts believe these results will have a significant impact on the remainder of the year. Domestically, the coming days will also see the release of quarterly figures from Adidas, Airbus, Mercedes-Benz, BASF, Volkswagen, and Deutsche Bank.

The LBBW analysts consider it encouraging that the difficult stock market phase of October is ending. Statistically, the first ten months have laid the groundwork for a positive year-end. “With positive DAX performance from January to October, further gains followed in 20 out of 24 cases by year-end,” they wrote on Friday. Even if the DAX were only to maintain its current gains, this stock market year would be its best since 2019./tih/edh/he