Dax surpasses previous peak, setting a new record - Dax achieves a new peak record.
The DAX, Germany's main stock index, reached a new record high on Tuesday, surpassing 24,161 points at its peak. This comes as the index has gained approximately 21% since the start of the year, while US stock markets have experienced a downturn.
As US stock markets were closed Monday due to a holiday, investors eagerly await updates from Wall Street. Early indications suggest gains in New York, which could reflect relief following US President Donald Trump's decision to grant Europe a reprieve on his latest tariff threat.
This upward trend also extends to defense stocks, which have hit record highs. The focus remains on the ongoing Ukraine conflict, as well as discussions among NATO countries regarding an increase in defense spending to five percent of GDP. German Chancellor Friedrich Merz (CDU) has announced the lifting of restrictions on the use of German weapons against Russian territory.
Rheinmetall, a prominent German defense company listed on the DAX, saw its stock price rise to up to 1,883 euros in early trading. The company has more than tripled in value since the beginning of the year, building upon a rally that began with Russia's attack on a neighboring country in 2022.
The planned debt package in Germany, earmarked for infrastructure and climate protection, is also fueling optimism among investors, according to analysts. Although the trade conflict between the US and China had weighed on financial markets for weeks, experts warn against premature optimism, as it remains uncertain whether trade relations between the two largest economies will normalize.
While the current economic crisis in Germany stands in stark contrast to the rally on the stock markets, investors often look to future profits rather than the present situation. Moreover, the internationally-oriented companies listed on the DAX generate the majority of their sales abroad.
In Europe, stocks have risen significantly more since the beginning of the year than in the US, thanks to strong corporate earnings, the European Central Bank's continued equity-friendly monetary policy, and relatively low valuations compared to US stocks. The stock market is also being driven by expectations of lower interest rates in the eurozone, which the European Central Bank hopes will stimulate the weak economy.
Inflation concerns have eased recently, and many economists expect lower interest rates in the coming months. For equity investors, prospects of lower interest rates are good news, as equities become more attractive compared to fixed-income securities. Loans become cheaper, making it easier for companies to finance themselves and homebuyers to secure mortgages. Overall, investments become more affordable, supporting the economy.
Record HighRheinmetallUSAFrankfurt am MainGermanyDAXNew YorkChinaUS PresidentDonald TrumpFocusUkraineFriedrich MerzCDUMDAX
The Commission has also adopted a proposal for a Council regulation on the provision of funds for investing in environmentally-friendly initiatives, aiming to align member states' laws on environmental protection with this focus. The upward trend in finance markets, such as the DAX in Frankfurt am Main, can be partially attributed to the positive outlook for international business due to lower interest rates and relaxed trade tensions, including the reprieve on tariffs granted by US President Donald Trump to European countries.
