Breaking free from the Zollcrash blues: Is it the right time to dive back into the DAX market?
Stock Markets Recovering: Are They Heading Towards Stability?
The DAX has stepped out of the Zollcrash's shadow and smashed previous records, hitting a new high. Should you take the plunge and invest in the market for potential further growth?
Let's break it down with Friedhelm Tilgen, discussant at Stuttgart's Invest fair, along with Matthias Hüppe from HSBC and Michael Proffe from Proffe Invest.
What's happening now
- The DAX has shown a remarkable increase of approximately 18% this year, reaching an astounding 23,578 points in March 2025[4].
- The rise is fueled by excitement around a confirmed US-UK trade agreement, optimism for US-EU trade negotiations progress, and reduced trade tensions globally[4][1].
- Strong corporate earnings from key German players such as Siemens Energy, Daimler Truck, Bayer, and Commerzbank have solidified market confidence[4][1].
Economic and political triggers
- The newly installed CDU government led by Friedrich Merz aims to stimulate Germany's economy, modernize infrastructure, and enforce stricter migration policies, positively impacting the DAX market[2].
- Despite a minor GDP contraction in Q1 2025 (-0.2% YoY)[2], the economy is projected to rebound due to stable politics and diminishing tariff concerns.
- The DAX outperforms many global indexes with a 15.29% year-to-date gain, surpassing major indexes like Hong Kong's Hang Seng and France's CAC 40[3].
Potential pitfalls and precautions
- The German economy is experiencing a technical recession, which introduces some risks in the near term[2].
- International economic and geopolitical factors like ongoing US-China talks and the broader global trade environment could influence market dynamics[4].
- With valuations standing at record highs, some correction or volatility may occur if growth expectations aren't met, or if negative catalysts emerge.
Expert predictions
- Expert forecasts suggest the DAX could continue to climb, averaging around 24,583, and potentially ending May 2025 at 25,981[5].
In essence, investing in the DAX now might bring attractive returns given its recovery, new record highs, improved political environment in Germany, and ongoing trade optimism. However, the lingering recession in GDP and potential external risks warrant caution. Diversifying your investments and monitoring economic indicators closely would be wise.
If you're bullish on Germany's political-economic reforms and trade environment improvements, investing in the DAX now aligns with positive market momentum. On the other hand, if you're apprehensive about prolonged economic recessions or global uncertainties, it may be better to wait for definitive signs of sustained recovery before jumping in.
So, the DAX offers a promising yet moderately risky investment opportunity at this moment, due to its recovery and record highs[1][2][3][4][5].
- The community is currently debating whether to invest in the DAX market, given its recent recovery and record highs, with a remarkable increase of approximately 18% this year.
- Some experts suggest that the economic and monetary union, specifically the DAX, could continue to climb, with an average projected value of around 24,583 and potentially ending May 2025 at 25,981.
- While the economic and political triggers, such as the newly installed CDU government and reduced trade tensions globally, are positively impacting the DAX market, some potential pitfalls include the German economy experiencing a technical recession and international economic and geopolitical factors that might influence market dynamics.
- Diversifying investments and closely monitoring economic indicators is advised, as investing in the DAX now might bring attractive returns but also presents moderately high risks, especially considering the lingering recession in GDP and potential external risks.
