Weekly Outlook: “Quarterly Reports Are the Next Major Test”

Despite headwinds: Hardly anyone expects significant losses on the DAX. Some see the tech correction as nothing more than a “selective revaluation,” others point to improved leading indicators, and still others already see the start of the year-end rally.

October 19, 2026. FRANKFURT (Deutsche Börse). Falling AI stock prices, high oil prices, unrest in France—none of this seems to faze the DAX. At most, slight profit-taking is expected. “Investors on the German stock market showed strong nerves, despite the AI sell-off in Asia and the U.S.,” comments Ralf Umlauf of Helaba. The DAX (DE0008469008) stands at 25,490 points on Monday morning, down from 25,622 on Friday evening.

The Nasdaq 100 tech index (US6311011026) had slipped again on Friday, falling to its lowest level in four weeks. Once again, this was driven by concerns that the multi-billion-dollar AI investments might not pay off. Meanwhile, the price of Brent crude oil (XC0009677409) had once again reached the $110-per-barrel mark; on Monday morning, it stood at $107, slightly lower. In addition, France—the EU’s second-largest economy—saw devastating protests in many regions over the weekend.

“Just a Selective Revaluation”

For Christoph Müller of DZ Bank, the current tech correction is not a sign that the cycle is ending, but rather a selective revaluation. “The key factor will be whether the prospect of higher long-term profits from AI investments remains intact,” he explains. For him, the quarterly reports will be the next litmus test. “If order intake, investment plans, and earnings confirm the growth trajectory seen so far, the correction is likely to remain limited.” In the short term, the bank sees upside potential, partly because the hyperscalers have little incentive to cut investments amid strategic competition. Things could get significantly more turbulent in 2027—due to high valuations and earnings expectations, as well as persistently high yields. “The greatest risk is potential contagion effects in the event of a major Neocloud outage.” Neoclouds are—unlike traditional cloud operators such as Amazon, Microsoft, or Google (hyperscalers)—specialized cloud infrastructure providers.

“More Than Just a Short-Term Uptick in Sentiment”

Following the DAX’s performance this year—which has been somewhat below average by international standards—DWS fund manager Sabrina Reeh now sees reasons for optimism. “The improvement in economic leading indicators for Germany is more than just a short-term uptick in sentiment,” she explains. She notes that the extensive government investments have not yet fully permeated the economy across the board. Furthermore, she says, the combination of industrial strength, a shortage of skilled workers, and a high degree of automation could make Germany one of the biggest beneficiaries of physical AI. However, she adds, the global economy must also contribute to the DAX’s performance. “With a robust global investment cycle, many German companies are likely to benefit more than average.”

“Confidence in the Year-End Rally”

According to technical analyst Christoph Geyer, the year-end rally has already begun. “The technicals alone show that the situation has improved significantly,” he explains. The support zone held and served as a “springboard” for the recent rise. “If one were to draw a downward trend line, it would have been broken by the end of the week,” he notes. Also notable is the visible increase in trading volume on Thursday and Friday. “This suggests that market participants are slowly gaining confidence in the year-end rally.”
In Germany, Deutsche Börse and SAP, among others, are reporting this week; in the U.S., Meta, General Motors, Tesla, Netflix, IBM, and Intel are set to report.

Key Economic and Business Data

Monday, October 19

4:00 a.m. China: Third-quarter GDP. GDP rose 4.5 percent in the third quarter compared with the same period last year. That is slightly more than expected.

4:00 a.m. China: September retail sales/industrial production. Retail sales rose 1.1 percent year-over-year, exceeding forecasts. Production at large industrial enterprises increased by 5.5 percent compared to the previous year.

Tuesday, October 20

11:00 a.m. Germany: ZEW Economic Sentiment Index (October). According to DekaBank, following the state elections, it appears increasingly difficult for the federal government to agree on the implementation of its reform plans. At the same time, concerns about French public finances are mounting, and uncertainty prevails on the stock markets regarding the business performance of tech companies. All in all, this is an environment in which the ZEW Economic Expectations for Germany are likely to decline.

Wednesday, October 21

8:00 a.m. United Kingdom: Consumer Price Index for September. A year-over-year increase of 3.3 percent is expected compared to September 2025.

Friday, October 23

10:00 a.m. Eurozone: Purchasing Managers’ Index for October. Commerzbank believes that the combined Purchasing Managers’ Index for the manufacturing and services sectors in the eurozone is likely to hold steady at its recent high level in October. This represents a good starting point for growth in the fourth quarter.