The Dax opened the trading day on a positive note on Friday morning. At around 9:30 am, the leading index was calculated at around 23,499 points, 0.6 percent above the previous day’s closing level. Prior to that, at 9:12 am, a new record high of 23,524 points had been reached. At the top of the price list were the shares of Siemens Energy, Daimler Truck and Bayer, while the stocks of MTU, Zalando and the Allianz were at the bottom.
In Frankfurt, the focus was initially on the trade deal between the United States and the United Kingdom. “The London Deal from Trump is essentially only a loosely defined framework and offers the US President mainly an exit option: He can later claim that he does not have to reactivate the reciprocal tariffs” commented Jochen Stanzl, chief market analyst at CMC Markets. “The stock markets are not celebrating the agreement because it shines in all its details, but because this rough framework alone could suffice to make the temporary suspension of the tariffs permanent.”
Analysts expect an average profit growth of six percent over the next twelve months, followed by slightly under 13 percent in the following year, explained Stanzl. “An current price-earnings ratio of about 17 suggests that the index could rise to 24,700 points in twelve months and even to 27,900 points in two years – assuming that investors continue to accept a relatively high valuation level.”
Politically and economically, this potential is being created twice, according to the analyst. “Firstly, the expectation of expansive fiscal programs – such as higher infrastructure, energy and defense spending – boosts revenues and profits of Dax companies. Secondly, the gradual normalization of monetary policy following the inflation wave of the past years lowers the interest rate, which further supports stocks.”
The European community currency was slightly stronger on Friday morning: One euro cost 1.1247 US dollars, while one dollar was equivalent to 0.8891 euros.
Meanwhile, the oil price rose: A barrel of North Sea crude was priced at 63.32 US dollars at around 9 am Central European Time on Friday, which was 48 cents or 0.8 percent more than the closing price of the previous trading day.