German economy currently amid a period of economic downturn
The German DAX index experienced a significant surge on Thursday, reaching a new high of 24,192 points, buoyed by strong European market performance and optimism surrounding upcoming US-Russia talks on the Ukraine conflict, as well as expectations of accommodative monetary policies.
Key factors contributing to the DAX recovery included investor sentiment buoyed by the potential easing of geopolitical risks and the expectation that the US Federal Reserve may cut interest rates before 2026, which supported risk assets including European equities. Most European equity indices climbed as Asian markets fell, reflecting regional divergence but European resilience.
Bitcoin reached a record high, signaling a broader risk-on mood among investors, particularly with supportive stances from the Trump administration and speculation about monetary easing. Oil prices edged higher amid market anticipation of the Russia-US summit outcomes, as Russia is a major oil supplier, influencing energy stocks within the DAX.
Despite a surprising surge in US producer price inflation (PPI), which complicated the rate-cut outlook, markets appeared to look beyond this data momentarily, focusing on geopolitical developments and central bank policy moves.
Notable performers within the DAX included Allianz SE, whose shares gained 4.1% on the back of lower catastrophe losses in the second quarter and reaffirming its full-year outlook. Deutsche Telekom, on the other hand, saw its shares fall 5% despite raising its outlook, due to a perceived weakness in the home market. The home market performance of Deutsche Telekom was criticized by analysts.
Rheinmetall's stock slipped 8% to the bottom of the DAX due to sluggish order intake dynamics and missing revenue expectations. However, Siemens managed to grow in the third quarter despite challenging geopolitical conditions, closing 3.7% higher.
The MDAX also gained significantly, closing at 31,331 points. The time and location for the meeting between Donald Trump and Vladimir Putin have yet to be determined. Both sides stated that the conditions for a summit are fundamentally in place, with Putin considering a meeting involving Ukrainian President Selenskyi possible, but noting that the conditions for this have not yet been met.
The DAX's rise was fueled by a blend of geopolitical optimism, monetary policy expectations, and positive investor sentiment across Europe, outweighing inflation concerns seen in US data that day.
- The DAX's rise was also supported by the anticipation of growth within various sectors of the industry, finance, and business, as investor sentiment was boosted by expectations of accommodative monetary policies and potential easing of geopolitical risks.
- The strong performance of the German DAX index might encourage businesses in the industry, finance, and other sectors to expand or make heavier investments, capitalizing on the positive market movement.
