Yesterday's earnings reported by Dax
Stock Market Sizzles Midday
The 20,000 point mark on the Dax, once a hot topic, seems far-fetched for now. Kicking off the year, the index faced a steep climb and, during trading, dipped below the 1,000 point threshold. By midday, the Dax had plummeted 0.5% to 19,924 points on its second trading day of 2025. The MDax fell 0.4% to 25,612 points, and the Euro Stoxx 50 dropped 0.6%.
"The Dax is still grappling to find buyers with enough conviction to push the index steadily above the 20,000 mark," stated expert Jochen Stanzl from broker CMC Markets. The upcoming February 5th inauguration of the new U.S. President could strain investor resolve.
Turbulent Rollercoaster
Investors hope that companies in the U.S. will reap benefits from lower taxes and looser regulations under the new administration. Yet, concerns loom over potential higher tariffs elsewhere and the risk of rekindled inflation. "Historically, protectionism has often led to heightened volatility in stock markets," warned Stanzl.
According to chart expert Martin Utschneider of Finanzethos, the Dax has entered a consolidation phase since it ended its previously consistent year-end rally in mid-December. Investors should now focus on monitoring this consolidation, as the index generally trends upward in the medium to long term. The short-term support at 19,926 points remains an essential reference point, tested briefly on Friday.
Power Surge for Utilities
RWE led the Dax, climbing 1.9% on renewed enthusiasm in the energy sector. The company had already been a sought-after stock the day prior. The year 2025 holds promise for the formerly struggling sector, although the stock lost 30% of its value in 2024.
The shares of Deutsche Telekom rose by 0.8%. Traders attributed ongoing share buybacks as a positive factor. The telecommunications company announced the up to €2 billion program in October, with the purchase of the first tranche already underway.
Automotive Sector Stumbles
Airbus shares, the previous day’s biggest winner, lost about 1% after reports that the aircraft manufacturer fell short of its delivery target in 2021, despite a late surge. The news broke late on the previous day, but the stock didn’t react significantly initially. MTU shares also dipped 1.7%.
Investors remain skittish on German automakers, with no sign of recovery on the horizon. Analysts cited a Bloomberg report suggesting that some electric vehicles in the U.S. might soon lose their eligibility for tax credits as a reason for the 0.8% decline in Volkswagen shares.
The cloud of a looming European recession hangs over the foreign exchange market. The euro is inching closer to parity with the dollar in massive leaps. On Thursday, the common currency fell below the $1.03 mark for the first time since November 2024. On Friday, it was trading at $1.0288, relatively unchanged. Investors currently betting on the US economy continuing to outperform others predict the US Federal Reserve will slow its interest rate cuts this year. As a result, on a weekly basis, the euro lost around 1.5%, while the dollar index surged more than 1%. Last Thursday, it reached its highest level in over two years, at 109.533 points.
- Jochen Stanzl from broker CMC Markets warned that historically, protectionism has often led to heightened volatility in stock markets.
- The short-term support at 19,926 points remains an essential reference point for the Dax, as it was tested briefly on Friday.
- RWE led the Dax, climbing 1.9% on renewed enthusiasm in the energy sector, despite losing 30% of its value in 2024.
- Investors currently betting on the US economy continuing to outperform others predict the US Federal Reserve will slow its interest rate cuts this year, which could cause the euro to further depreciate against the dollar.
