The German stock market, as measured by the Dax, closed the week with significant gains. At the Xetra trading close, the index was calculated at 23,147 points, a 2.6 percent increase compared to the previous trading day.
Rheinmetall, a German defense company, led the pack with gains of up to 15 percent, driving the Dax to new heights. Airbus shares also featured prominently in the top performers.
“The gap between European stock markets and Wall Street has widened further today” said Jochen Stanzl, chief market analyst at CMC Markets. “In anticipation of significantly higher defense spending by European governments, investors are taking a liking to defense stocks – high percentage price increases at Rheinmetall and Co. are the result. Moreover, the ever-growing sums required for the defense capability of the old continent are only financeable through debt.”
The large sale of German government bonds on Monday spoke volumes. “The sheer magnitude of the capital required for the buildup can only be financed through debt. Although Germany profits from relatively low interest rates and a low debt-to-GDP ratio, the hundreds of billions of euros in question are a statement. The bond market will have to digest this for a while” Stanzl said.
The European common currency was stronger on Monday afternoon, with one euro costing 1.0497 US dollars and one dollar being worth 0.9527 euros.
The gold price was able to profit significantly, with a fine ounce selling for 2,891 US dollars in the afternoon, equivalent to 88.54 euros per gram, a 1.2 percent increase.