The German stock market benchmark, the DAX, experienced a modest gain on Tuesday, closing at 23,711 points – a 0.5% increase from the previous day’s close. While the rally began positively, the day’s trading was punctuated by volatility and fluctuations, reflecting underlying anxieties about the year-end outlook.
Analysts caution that the DAX’s progress has been labored throughout December, failing to meet standard expectations following a disappointing November. Christine Romar, Head of Europe at CMC Markets, characterized the current situation as avoiding further decline, a minor technical victory rather than a decisive upward trend. The prospect of a year-end rally to reclaim all-time highs remains uncertain, with Romar suggesting a significant breakthrough in the ongoing conflict in Ukraine is likely the only catalyst capable of driving substantial gains.
The performance of Bayer, the beleaguered German pharmaceutical and chemical giant, offers a particularly compelling narrative. The company’s stock surged during Tuesday’s trading, driven by speculation surrounding potential intervention from the US Supreme Court. A Supreme Court decision, should it occur, could effectively dismiss numerous outstanding legal claims stemming from the Monsanto acquisition – a move that would not only significantly reduce the €7 billion already provisioned for liabilities but also eliminate the steep discount currently weighing on the share price. This potential resolution represents a fragile hope for a company burdened by years of legal battles and financial uncertainty.
Beyond Bayer, Siemens Energy, Rheinmetall and Deutsche Bank also saw positive performance, while Symrise, Zalando and Henkel underperformed on the Frankfurt exchange.
Easing concerns surrounding energy costs also provided a subtle boost to market sentiment. Natural gas prices declined to €28 per megawatt-hour (MWh) for delivery in January, representing a 1% drop from the previous day and suggesting consumer electricity prices could stabilize around 7-9 cents per kilowatt-hour (kWh) if the trend continues. A slight decrease in oil prices, with Brent crude falling to $63.06 per barrel, further contributed to the cautiously optimistic atmosphere.
The euro, however, weakened slightly to $1.1607, highlighting continued currency volatility. Ultimately, despite the day’s gains, the DAX’s precarious position underscores the inherent fragility of the German economy dependent upon geopolitical stability and ongoing resolution of significant legal and financial challenges.