FRANKFURT (dpa-AFX) - The past few trading days have once again proved the skeptics wrong. The weakness of the Dax at the beginning of the year has so far not proved to be a harbinger of a stronger correction, but rather a run-up to new highs. As the new US President Donald Trump takes office, German blue chips are in top form. There is no sign of the concerns that his economic policy plans had raised in the market.

This means that the chances for further gains are good. "Consistently setting new record highs after minor corrections ensures a stable upward trend that can serve as a good foundation for what is coming out of the US starting Monday USA," notes capital market strategist Jürgen Molnar of broker RoboMarkets, with a view to the inauguration of the 47th President of the United States.

However, the past few days of trading had already shown that things are rarely as hotly debated in politics as they are cooked up. Even before the new US administration was launched, there were already signs that the tariff policy might be less aggressive. "According to recent reports, advisors to the new President Trump are working on plans for a gradual but steady increase in import duties of two to five percent per month, among other things," said Landesbank Baden-Württemberg (LBBW). "This approach would at least be less confrontational than the threats made during the election campaign."

Robert Halver of Baader Bank also sees it this way. "At least the US bond market seems to be having a taming effect on Trump's tariff intentions, which – if increased as promised during the election campaign – would spark even more price inflation," emphasizes the capital market analyst. That would be very positive for German export stocks, which had suffered from concerns about a tougher US trade policy.

In addition, monetary policy is providing a tailwind. Not only is the European Central Bank's key interest rate below that in the US, but it is also likely to cut rates more sharply this year than its overseas counterparts. In Halver's view, "significant economic risks in the eurozone with rather declining inflation rates" suggest this. However, this would not only support the economy and fuel the stock markets, but also provide impetus on the currency side. Halver concludes that the foreseeable widening of the interest rate and growth gap will cause the euro to continue to weaken significantly against the US dollar. This will support export-oriented companies and cushion rising US tariffs.

However, the focus of attention will initially be on the launch of the Trump administration. "It is to be expected that Trump 2.0 will start the new term prepared with a package of measures already in place and will not stumble into it as he did in 2017," predicts Halver. However, there are still big question marks over exactly what the measures will look like, which could result in stronger fluctuations on the stock markets.

The upcoming federal election campaign should not be completely forgotten either. So far, the German stock market has been unimpressed, but the possible consequences of the vote in February should not be completely ignored. "Currently, we are experiencing a feel-good election campaign with pretty window-dressing, but it can only be implemented if people consistently ignore the math," Halver critically notes. "In contrast, urgently needed concepts for eliminating our economic problems are in short supply." The economists at Hessische Landesbank are also skeptical when it comes to the party manifestos: "The parties' fiscal policy measures listed in them were not seen by the media as comprehensive reform plans, but rather as implausible election promises."

Meanwhile, the companies' figures and outlooks will show how things actually stand for them. The start of the reporting season was successful nonetheless. Four of the largest US banks presented strong results, and Suss Microtec provided a positive sign for German semiconductor manufacturers as a smaller company. In Germany, the reporting season will still be on a back burner next week, but large companies from Europe and the US are showing the way forward in the individual sectors.

On the economic front, attention is focused on the ZEW Indicator of Economic Sentiment for Germany, which will be released on Tuesday. On Friday, the Purchasing Managers' Indices for the manufacturing sector will provide information on sentiment in industry in key eurozone countries and in the single currency area.

The DAX is in an excellent position from a chart perspective. "The confirmation of the previous breakout has now released additional upward momentum," says UBS. The 21,000-point mark is within reach and there are no more hurdles on the way there. On the other hand, the index is protected from falling by a whole series of supports./mf/tih/la/jha/

--- By Michael Fuchs, dpa-AFX ---