The German stock market experienced a robust start to the week, with the DAX index closing at 25,405 points – a 0.6% increase compared to the previous day’s trading. This marks the fifth record high achieved by the index in just seven trading days this year, a phenomenon prompting renewed investor interest following a comparatively lackluster second half of 2023.
Shares in healthcare giant Fresenius Medical Care, its parent company Fresenius and consumer goods firm Beiersdorf led the gains. Conversely, automotive manufacturers faced pressure, with BMW, Volkswagen, Porsche Holding and Mercedes-Benz among the worst performers on the index.
The market’s positive trajectory is, according to Christine Romar, Head of Europe at CMC Markets, directly linked to growing anxieties surrounding the independence of the U.S. Federal Reserve. “Trump’s recent challenges to the Fed’s autonomy are driving investors toward safe-haven assets like gold, but surprisingly, also bolstering the German stock market” Romar stated. This dynamic suggests the potential for the upward trend begun in Frankfurt’s initial trading week to continue, allowing the DAX to further narrow the gap with Wall Street.
Notably, predicted profit-taking at the psychological barrier of 25,000 points has failed to materialize, effectively compelling investors who had previously anticipated such a correction to re-enter the market. This self-reinforcing cycle, known as a “bull market breeding its own bull market” is further fueled by indications that international investors are diverting capital away from the U.S. in search of alternative investment opportunities.
The euro strengthened against the dollar, trading at $1.1678, reflecting a corresponding dollar value of €0.8563. The price of gold also saw significant increases, reaching $4,622 per fine ounce (+2.5%), equivalent to €127.26 per gram. Oil prices experienced a slight upswing, with Brent crude trading at $63.56 per barrel, a 0.4% increase from the previous day’s close.
The convergence of these positive signals – a surging DAX, a strengthening euro, rising gold and oil prices – raises broader questions about the shifting global investment landscape and the potentially long-term ramifications of political instability in the United States on international financial markets. The resilience of the German market, defying expectations of profit taking, requires careful observation and highlights the potential for Europe to become an increasingly attractive investment destination.