The DAX saw a marked increase on Tuesday, closing the trading day at 24,402 points, representing a gain of 1.7% compared to the previous day’s close. After a strong morning start, the index maintained its gains throughout the mid-day trading session, despite fluctuations.
According to Andreas Lipkow, Chief Market Analyst at CMC Markets, the index’s positive performance was largely supported by better corporate earnings, which successfully offset the continued uncertainty regarding the Middle East region. Lipkow noted that investors are focusing on strong earnings during the current reporting season, rather than the ongoing volatility related to the US-Iran conflict.
Although the passage of a Maersk container ship through the Strait of Hormuz provided a temporary lift to the DAX, the geopolitical conflict is expected to remain inconclusive for the next two or three weeks, putting pressure on energy prices. Furthermore, this uncertainty heightens inflation expectations and dampens consumer sentiment among private households.
Lipkow also pointed to secular structural changes, explaining that many companies are streamlining their workforce and replacing employees, particularly in the technology sector, with AI technologies. Given that these roles typically belong to highly trained professionals with significant corresponding purchasing power, this dynamic suggests an emerging “perfect stagflation scenario” for the coming quarters.
Despite these broader warnings, investors remain optimistic, driven by the stellar results from US Big Tech companies and those in the financial, defense, and energy sectors. Lipkow highlighted that over 80% of the companies releasing quarterly reports in the S&P 500 exceeded expectations. However, he cautioned that the major question remains whether this positive trend can be sustained in the coming quarters, given the overall complex environment. He added that the DAX is currently less a reflection of the German economy and more determined by global conglomerates and major US indices, citing the strong figures from companies like Rheinmetall, SAP, and Siemens as evidence.
At the close of trading, shares in Infineon, Siemens, and Commerzbank led the gains, while FMC was the weakest performer.
On the commodities front, gas prices dropped by three percent against the previous day, costing 47 Euros per megawatt-hour (MWh) for delivery in May. This implies a consumer price of at least nine to eleven cents per kilowatt-hour (kWh), assuming prices remain stable. Oil prices also fell sharply; the Brent crude barrel traded at $110.70 on Tuesday afternoon, marking a 3.3% decrease of 373 cents from the close of the prior trading day.
Finally, the Euro strengthened slightly on Tuesday afternoon, trading at $1.1705 per Euro, meaning the US dollar was available for 0.8543 Euros.