The German Dax index started the trading day on a positive note on Tuesday. By around 9:30 am, the leading index was calculated at approximately 23,355 points, a 0.9 percent increase from the previous day’s closing value.
At the top of the stock list, Continental, BMW and the Porsche-Holding’s papers were leading the way, while Airbus, Rheinmetall and Fresenius were at the lower end.
“It’s the great day of decision in the German Bundestag” said Thomas Altmann, a stock analyst from QC Partners. “The markets have already reacted strongly to the plans for higher government debt: with rising interest rates on the bond market and rising stock prices.” Even if the vote succeeds, it will take time for the packages to actually manifest in higher economic growth.
The Dax is scratching at its all-time high and remains the “big outperformer on the stock market” according to Altmann. For further price gains, however, it requires long-term oriented buyers who believe in a sustainable, positive economic turnaround in Germany. The optimism of investors, however, has its limits: “This is visible in the increasing hedging activity. The volume of outstanding put options on the Dax is only slightly below the highest level of the past 15 months.”
Additionally, the monthly ZEW economic expectations will be published during the day, which also serves as an important signal for investors. They will be released at 11 am.
The European common currency was slightly stronger on Tuesday morning: one euro cost around 1.0928 US dollars and one dollar was worth approximately 0.9151 euros.
Oil prices also rose: a barrel of the Brent North Sea type cost around 71.65 US dollars by 9 am German time, a 0.8 percent or 58-cent increase from the previous day’s closing value.