Is this a stock market surge involving DAX stocks?
The German benchmark index, the DAX, held up well despite the weakness of US markets the day before and disappointing quarterly reports from European companies. After two consecutive record-breaking days, the DAX has hit the brakes today, standing at 19,441 points, down 0.2 percent. The Euro Stoxx 50 is also down by 0.6 percent, falling below the 5,000-point mark.
Capital market strategist Jürgen Molnar of Robomarkets states, "DAX is taking a breather." Despite this, there is optimism that the index will maintain its upward momentum in the near term, supported by softer inflation data, rate cut hopes, and positive geopolitical signals. However, some bearish signals suggest possible short-term volatility.
The recent good run of the Adidas share did not help its current performance. The sportswear manufacturer's share is currently at the bottom of the DAX, with a loss of around 4.5 percent (WKN: A1EWWW). Despite Adidas raising its 2024 forecasts again after a better-than-expected quarter, the share is currently losing value.
Siemens Energy, on the other hand, is leading the index in terms of performance, showing a gain of over one percent. The German stock market barometer reached a new record high of 19,633 points the day before but then lost momentum and closed slightly in the red.
Historically, the DAX has achieved more than half of its record highs in the first halves of years, and the current trend fits this picture. Analyst Martin Utschneider of Finanzethos sees an intact upward trend, summarizing, "DAX is catching its breath, but not falling."
Despite Adidas' share loss, the overall trend seems resilient enough to absorb this effect without derailing the upward trajectory in the near term. Forecast data suggests the DAX will trade in the range of approximately 22,000 to 25,400 through August 2025, with an average around 23,700, consistent with a cautiously optimistic outlook.
Softer German wholesale and inflation data have increased expectations for more accommodative monetary policy from the European Central Bank, including potential rate cuts, which supports equity markets. Geopolitical optimism stemming from recent diplomatic developments has further boosted investor confidence in German equities.
However, portfolio manager Thomas Altmann of QC Partners questions, "Is the rally just taking a pause or is it over?" Despite the short-term volatility, the predicted trend for the DAX after recent record-breaking gains is a continued bullish tilt, although short-term fluctuations remain possible amid some bearish signals and stock-specific impacts such as Adidas’ performance.
In summary, the predicted trend for the DAX after recent record-breaking gains is a continued bullish tilt supported by soft inflation, monetary easing hopes, and geopolitical optimism, although short-term fluctuations remain possible amid some bearish signals and stock-specific impacts such as Adidas’ performance.
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