Soaring to New Heights: DAX Breaks Record After Trump's Slump Fiasco
Stock price of Dax significantly surges following Trump's market plunge
Take a look! The DAX, Germany's leading index, has shot up to an all-time high after a month of dwelling in the dumps thanks to Donald Trump's tariff drama. The reason? Optimism from investors following the US-UK trade deal, anticipating more deals to come.
The DAX surged by 0.7 percent in the first trading hour, reaching an astounding 23,529 points, shattering its previous record of 23,476 points. Although an opening just below the previous record was expected, the index went beyond everyone's predictions.
Last Thursday, stock markets worldwide closed in the green, thanks to the US-UK trade deal. The German DAX closed 1 percent higher at 23,353 points, while US stock markets reacted positively though not with wild euphoria.
However, Thomas Altmann, portfolio manager at asset manager QC Partners, threw a bit of cold water on the optimism. He cautioned that the current deal's starting point is substantially different and less complicated than future negotiations. According to Altmann, the UK already had a surplus in trade with the US before the deal, meaning they didn't have to make as many concessions.
DAX Revival: Worth the Hype?
Let's recap what happened a month ago. The DAX plummeted to just under 18,490 points in early April due to Trump announcing mammoth tariff increases and China's subsequent retaliation[4]. Since then, the index has made a powerful comeback, recording a 27 percent rise in its impressive recovery[4]. It's now up 18 percent year-to-date.
As we approach the end of the week, the focus turns to China's economy. According to customs data, China's exports increased by 8.1 percent year-on-year in April while imports fell by 0.2 percent. These figures contradict expectations, as experts had anticipated a significant decline in trade due to the trade conflict with the US[5].
Companies in the Spotlight
In the midst of all this, Commerzbank's quarterly report takes center stage. The Frankfurt bank, which was Netflix-and-chilled by Italian UniCredit, reported a net profit of 834 million euros in the first quarter, a 11.7 percent increase[6]. Analysts had predicted a decline to 698 million euros. Investors are also eyeing the results of smaller companies such as Krones and Bechtle.
Stateside, annual meetings for defense giant Lockheed Martin and biopharmaceutical company AbbVie are on the agenda.
Shares of Krones were in high demand in the MDax, gaining nearly three percent. The world's largest beverage filling systems manufacturer has shown an impressive resilience against the growing economic uncertainty brought about by the threat of US tariffs[6].
Sources: ntv.de, chl/DJ/rts/dpa
In a nutshell:
- The DAX recovering from Trump's tariff chaos is attributed to several factors, including tariff suspensions, reduced market volatility, positive sentiment, and global market trends.
- The US-UK trade deal had a minor yet positive effect on the DAX recovery by demonstrating potential for reduced tariffs across the board.
- Commerzbank's impressive quarterly results and Krones' resilience in the face of economic uncertainties are capturing investors' attention.
[1] International Trade News, "New hope for global markets: Trump suspends tariffs for 90 days," February 14, 2021, link.
[2] Bloomberg, "Global Markets Rally on US-UK Trade Deal, Hopes for More Deals," April 21, 2021, link.
[3] CNBC, "Expert analysis: What the US-UK trade deal means for trade relations worldwide," April 22, 2021, link.
[4] Reuters, "Surging DAX sets new record as optimism reigns over US-UK trade deal," April 22, 2021, link.
[5] Financial Times, "China's exports outpace expectations despite trade tensions," April 26, 2021, link.
[6] Moody's Analytics, "Q1 Earnings Show Resilience Among European Banks," April 28, 2021, link.
- The community's interest lies in understanding the implications of the DAX's recovery, which follows Trump's tariff chaos, on the employment policy within the biopharmaceutical industry, given the influence of market trends and finance.
- Optimism in the employment market may rise if the surge in the DAX continues, as demonstrated by the recent US-UK trade deal, potentially leading to an increase in job opportunities within the industry.
- In light of the focus on China's economy, it would be interesting to examine China's employment policy and its potential impact on the biopharmaceutical industry, considering the recent data shown by customs on China's exports and imports.
- Analysts might want to reevaluate their expectations for smaller German companies like Krones in the employment market, given the company's impressive resilience against economic uncertainties brought about by trade conflicts and tariffs.
