Frankfurt (Reuters) - Even after its latest rally, the Dax has not yet put the issue of records behind it.

At 17,434 points on Monday, the leading German index was only a few points below its latest record of 17,443.74 points set on Friday. However, analysts increasingly warned of possible setbacks. "Too many optimistic investors are not good," said Christian Henke from broker IG. "Nevertheless, market participants do not want to know about a correction."

The Dax has gained more than twelve percent since the beginning of the year. The American and Japanese stock markets have also been on a steep upward trend for weeks. Most recently, the stock market hype surrounding the topic of artificial intelligence (AI) has driven stock markets up worldwide. However, many investors are also betting that the major central banks, the Fed and the European Central Bank (ECB), will soon cut their interest rates and thus give the economy new momentum. Exactly when this might happen depends on the inflation figures for the coming months, among other things. Investors are therefore looking forward to the second half of the week, when the PCE deflator for January is on the agenda in the USA - a measure that the Fed believes is best suited to measuring price stability. Consumer prices in the eurozone will also be published. ECB President Christine Lagarde recently signaled that she does not believe in a hasty interest rate cut. Many experts do not expect a downward turn in interest rates until the middle of the year. In the run-up to the data, the euro was 0.2 percent firmer at 1.0845 dollars, while the dollar index fell slightly.

On the corporate side, things were rather quiet at the start of the week. Demand was particularly strong for defense stocks, which continued to benefit from the prospect of rising defense spending. Rheinmetall shares climbed by three percent to a fresh record high of 422.70 euros, making them the leader of the DAX. The shares of competitor Hensoldt gained more than seven percent in the MDax after suffering a price setback on Friday following the presentation of the balance sheet. Since the beginning of the year, Rheinmetall and Hensoldt have gained 43 and 28.5 percent respectively.

Vitesco, on the other hand, slid by around ten percent to 74.85 euros in the MDax. The shareholders of the Regensburg-based automotive supplier are coming off worse financially in the merger with majority shareholder Schaeffler than in the previous takeover bid. Schaeffler traded 1.6 percent higher.

On the Stockholm Stock Exchange, the acquisition of Tele2 by the French telecoms group Iliad drove up the Swedish company's shares. The shares gained more than ten percent at their peak. Kinnevic shares also advanced by ten percent at times.

INTEREST RATE SPECULATION DEPRESSES COMMODITY PRICES

On the commodities market, uncertainty about the timing of the US interest rate turnaround weighed on prices. North Sea oil Brent and US oil WTI both fell by up to 0.8 percent to 81 and 75.84 dollars per barrel respectively. The industrial metal copper temporarily fell by up to one percent to 8483 dollars per ton. The price of gold was also slightly weaker at 2029 dollars per troy ounce. Recently, the slow decline in inflationary pressure in the US had dampened investors' hopes of an early turnaround in interest rates. Investors fear that persistently high interest rates could severely damage the economy.

(Report by: Daniela Pegna, edited by Ralf Banser. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)