Stock reaches unprecedented peak for Dax index. - Dax hits a new peak in achievements
DAX Reaches Record High Amidst Geopolitical Relief and Strong Earnings
On Tuesday, the DAX, the leading German stock index, reached a new record high of 24,161 points. Despite ongoing uncertainties, the index has surged by around 21 percent this year, while US stock markets have faced declines.
Investors anticipate gains in US markets, which were closed on Monday due to a holiday. Indications suggest a positive yield in New York, reflecting relief over US President Donald Trump's temporary reprieve on tariff threats against Europe.
Meanwhile, the ongoing Ukraine conflict remains a focus. While NATO countries debate an increase in defense spending to 5 percent of GDP, the defense sector continues to rally. German Chancellor Friedrich Merz (CDU) announced the lifting of restrictions on the use of German weapons against Russian territory.
Three notable German defense stocks, Rheinmetall, Renk, and Hensoldt, all part of the DAX and MDAX, have seen record highs. Rheinmetall shares soared to as much as 1,883 euros in early trading, over three times their value since the beginning of the year, and over 20 times since the Russian attack on Ukraine in 2022.
Optimism in Germany is further fueled by the government's planned state investment package worth up to 500 billion euros for infrastructure and climate protection. This debt-financed fund is expected to boost investor confidence.
The trade conflict between the US and China, the world's two largest economies, had been a major concern for financial markets. However, experts warn against premature optimism as the normalization of trade between the US and China remains uncertain.
In contrast to the economic crisis in Germany, the stock market rally reflects investors' focus on future profits rather than the present situation. The 40 companies listed on the DAX are primarily internationally oriented and generate the majority of their sales abroad.
European stocks have risen more significantly than US stocks since the beginning of the year, thanks to strong corporate earnings, the continued equity-friendly monetary policy of the European Central Bank (ECB), and relatively low valuations compared to US stocks. The stock market is also driven by expectations of lower interest rates in the eurozone, which the ECB intends to use to boost the economy.
- Record High
- Rheinmetall
- USA
- Frankfurt am Main
- Germany
- DAX
- New York
- China
- US President
- Donald Trump
Sources:[1] Finanzen.net, 03.05.2025[2] Handelsblatt, 03.05.2025[3] Reuters, 03.05.2025[4] Welt, 03.05.2025
The Commission in Frankfurt am Main has also adopted a proposal for a Council regulation on the approximation of the laws of the Member States relating to the protection of the environment, as investors continue to invest in real-estate and stocks, with Rheinmetall and other German defense stocks on the DAX reaching record highs amidst geopolitical relief, including US President Donald Trump's temporary reprieve on tariff threats against Europe. Meanwhile, the trade conflict between the USA and China persists, causing experts to caution against premature optimism.