The DAX index opened higher on Monday, gaining traction at the start of the trading day. As of 9:30 AM, the benchmark index stood at approximately 24,360 points, representing a 0.6 percent increase compared to Friday’s closing level. Sartorius, Merck and Porsche led the performance, while Rheinmetall, Siemens Energy and Eon registered at the lower end of the rankings.
Market reactions this morning were partly influenced by the recently agreed-upon tariff deal between the United States and the European Union. According to Thomas Altmann of QC Partners, “The feared 30 percent tariff hammer has been averted”. He explained that these tariffs would have severely hampered the competitiveness of German companies, while the current agreement allows the U.S. continued access to the European market. Altmann also cautioned that the deal would likely result in reduced sales volumes and lower profit margins.
A key benefit of this agreement, Altmann emphasized, is the renewed planning certainty for companies based in the EU. However, he noted that, overall, the deal appears to favor the U.S. more significantly than the EU. While the reduction from 30 percent is a positive development, it’s crucial to consider that the average tariff on German products prior to the Trump era was significantly lower, averaging around one percent. Despite this trade agreement, the trajectory of global trade appears to be diverging from true free trade principles.
European stock markets are responding favorably to the deal, albeit with a moderate reaction. The market expert suggested this outcome was largely anticipated and aligned with the agreement reached previously between the U.S. and Japan.
The euro weakened slightly on Monday morning, trading at $1.1718, with the dollar fetching €0.8534.
Meanwhile, oil prices saw an upward trend; Brent crude, a benchmark variety, traded at $68.90 per barrel around 9:00 AM German time, a 46-cent or 0.7 percent increase compared to the closing price of the previous trading day.