FRANKFURT (dpa-AFX) - The Dax was able to build on its recent gains in the new week. "The traffic lights are pointing to green, investors are switching to risk-on mode," wrote analyst Claudia Windt of Landesbank Hessen-Thüringen (Helaba). Dwindling inflation worries and the associated new hopes for interest rate cuts as well as diminishing political uncertainties are contributing to this.

In this respect, the leading German index was able to move a little closer to its record high of just under 18,893 points reached in May, thus exiting its recent downward trend. The second round of the parliamentary elections in France on Sunday also put an uncertainty factor behind us. According to initial projections, the left-wing alliance is ahead in the parliamentary elections, contrary to all expectations. The right-wing nationalist Rassemblement National (RN) performed significantly worse than expected.

It only managed to come in third place behind President Emmanuel Macron's centrist camp, as reported by broadcasters TF1 and France 2 after the polls closed. However, neither camp is likely to achieve an absolute majority of 289 seats. Prime Minister Gabriel Attal drew the consequences after the election and announced his resignation. It remains to be seen whether President Macron will accept the resignation.

The result was initially received positively on the financial markets. The DAX was quoted at around 18,500 points by broker IG in early trading on Monday morning, slightly higher than on Friday evening. The euro was able to maintain last week's gains and continues to cost more than 1.0833 dollars.

According to Helaba analyst Windt, it is also positive that the traffic light government in Germany finally agreed on a budget for 2025 shortly before the summer break. This should both comply with the debt brake and include a "growth turbo", Windt emphasized positively.

In view of the German production figures from May, it would be a good thing if this were to kick in soon. After all, both production and order development had disappointed. "Another piece of bad news from the industry," commented economist Jens-Oliver Niklasch from Landesbank Baden-Württemberg. "It seems that a turn for the better is further away than ever."

Another key driver for the stock markets is the prospect of key interest rates in the USA falling sooner rather than later. Linked to this is the hope of economic stimulus for the global economy through falling financing costs for companies and consumers. However, the US inflation figures for June, which are due on Thursday, must not be a significant negative disappointment.

The inflation data from the United States will be a key factor influencing the Fed's interest rate decision, wrote Edgar Walk, chief economist at asset manager Metzler Asset Management. The data situation is currently ambiguous. From January to April, inflation tended to surprise with high figures, which triggered concerns about persistently high inflation. In May, however, the rise in prices slowed considerably.

"If inflation also showed weak momentum in June, nothing stands in the way of a key interest rate cut in September. Perhaps July could even come back into play," Walk summarized. Labour market data from the USA for the month of June published on Friday, which at least did not fuel any new inflation concerns, fit into this picture.

Robert Halver, Head of Capital Market Analysis at Baader Bank, is also rather optimistic about the new week. According to him, the often observed summer blues on the stock market should be limited this time. Instead, the familiar pattern is likely to continue for the time being, whereby upward breakouts are slowed down by profit-taking, but price slumps are seen as opportunities to enter the market.

Even in the typically low-turnover summer period, this suggests at least a volatile sideways movement, continued Halver. On the one hand, negative aspects such as the bumpy global economy or the political uncertainty in France are known or are seen as manageable. And on the other hand, "improved economic prospects and the materializing fantasy of interest rate cuts are creating a safety net against price slumps." After all, unlike the Fed, the European Central Bank has already turned its monetary policy around and cut its key interest rates again in June for the first time in almost five years.

Otherwise, investors are likely to look to New York on Friday. This is when major US banks present their business figures for the second quarter, kicking off the reporting season in the United States. Here in Germany, the start is slow. The Südzucker Group and packaging manufacturer Gerresheimer will be in the spotlight on Thursday with their quarterly reports./la/bek/he

--- By Lutz Alexander, dpa-AFX ---