Darkness falls, and Dax ascends on a Friday night
The German stock market began the week on a positive note, with the DAX and the EuroStoxx 50 recording modest gains, following a setback in the previous week. The recovery was cautious, as market watchers anticipated continued but limited upward movement.
The partial recovery was driven by a combination of factors. A wave of "secret dip buying" by investors, positive investor sentiment influenced by ongoing corporate earnings reports, and a generally improving medium-term economic outlook supported by monetary easing and fiscal stimulus in Germany played significant roles.
However, the broader economic environment saw some challenges. German industrial production slumped to its lowest level since the first Covid-19 lockdown, which could have constrained stronger gains.
Regarding specific companies during this period, detailed performance data for Deutsche Bank was not included in the available sources. The overall market sentiment was supported by earnings reports from several DAX-listed companies, which may include Deutsche Bank or similar financial firms. The situation for Commerzbank and Lufthansa remains unclear, as the search results did not provide specific performance details for these companies during this recovery phase.
Interestingly, the defense company Rheinmetall experienced a drop in shares due to softer-than-expected orders caused by political delays in budget approval, despite a strong order backlog and optimistic future outlook from increased defense spending.
Elsewhere, the auto supplier Stabilus reported a nearly 10% drop in revenue for the three months ending in June, accompanied by a 23% decline in adjusted operating profit (EBIT) for the same period. The company now expects results for the current fiscal year ending in September 2025 at the lower end of its guidance range.
In a positive development, the European Banking Authority (EBA) conducted a stress test, showing that banks in the European Union can withstand a severe economic crisis. This positive outcome boosted the shares of Deutsche Bank and Commerzbank, with both companies recording gains of 2.4% and 2.1% respectively.
Andrew Lobbenberg, an analyst at Barclays, upgraded Lufthansa's stock, while Barclays bank's positive assessment boosted airline stocks. The MDAX, an index of mid-cap stocks in Germany, gained 0.7%, and the EuroStoxx 50 climbed to an unspecified point.
Despite the recovery movements, capital market strategist Jürgen Molnar of RoboMarkets believes that the overall trend for the DAX is likely to remain downward. However, the DAX is still up around 18% for the year, and the MDAX reached 30,638 points by Monday morning. The DAX rose by 1.4% on Monday after a 2.7% loss on Friday, reaching 23,749 points by morning.
As the week progresses, it will be interesting to see how these trends continue to unfold in the German and European stock markets.
The recovery in the German stock market, as seen in the DAX and EuroStoxx 50, was influenced by various factors, such as investing activities, positive sentiment driven by corporate earnings reports, and monetary easing and fiscal stimulus in Germany. However, the improvement was cautious due to challenges in the broader economy, including a slump in German industrial production.
Despite the overall positive performance of the DAX, capital market strategist Jürgen Molnar of RoboMarkets predicts a downward trend for the index. On the other hand, specific companies like Lufthansa, Commerzbank, Deutsche Bank, Rheinmetall, and Stabilus have shown mixed results, with some experiencing growth while others experience losses or unclear performances.
