DAX Continues Record Run as Euphoria Returns to Frankfurt Stock Market

The DAX index in Frankfurt continues its record-breaking run with a 0.28% gain, marking its fourth consecutive day of gains. The MDax and EuroStoxx 50 indices also rose by 0.3% and 0.3%, respectively. Portfolio manager Thomas Altmann comments that "the euphoria is back," but warns of the potential dangers of the market's current trend.

The DAX index in Frankfurt continued its record-breaking run on Wednesday, gaining 0.28% to close at 24,372.83 points. This marks the fourth consecutive day of gains for the German benchmark index, which is now just 1.1% away from its record high of 24,479 points reached in early June [1]. The MDax index of medium-sized stocks and the EuroStoxx 50 index of the leading eurozone stocks also rose by 0.3% and 0.3%, respectively, adding to the overall positive sentiment in the market [2].

Portfolio manager Thomas Altmann from Frankfurt-based asset manager QC Partners commented that "the euphoria is back" in the market, but warned about the potential dangers of the current trend. He noted that while the market is speculating about who will receive the first twelve tariff threat letters from the U.S., the actual implementation of tariffs could be an immense burden for export-oriented European economies [5].

The positive sentiment in the market was also driven by the U.S.'s delay in implementing new tariffs and the ongoing negotiations between the U.S. and the EU. The U.S. has proposed a deal to the EU, maintaining a 10% baseline tariff on all EU goods with some exceptions for sectors like aircraft and spirits [2]. This has led to a cautious optimism among investors, who are hoping for a resolution to the trade dispute.

The German stock market's strong performance was also reflected in the SDAX index of small-cap stocks, which hit a record high on Tuesday and continued its record run on Wednesday [4]. The MDAX of mid-cap stocks also gained 1.01% to 31,057.91 points, while the EuroStoxx 50 rose 0.57% to 5,371.95 points [4].

Shares of companies that could benefit from record investments in German infrastructure, such as rail and transport technology group Vossloh and construction services provider Bilfinger, reached multi-year highs [4]. Shares of Salzgitter surged by 20% after news broke that a safety steel product had received approval for use by the German armed forces [4].

The DAX volatility index, which measures the implied volatility of DAX options, was down 5.34% to 17.67, a new 1-month low, indicating that investors are confident about the market's direction [3]. Gold futures for August delivery was up 0.01% to $3,317.20 a troy ounce, while crude oil for delivery in August rose 0.31% to $68.54 a barrel [3]. The EUR/USD exchange rate remained unchanged at 0.15% to 1.17, while the US Dollar Index Futures was up 0.09% at 97.26 [3].

Despite the positive sentiment in the market, investors remain cautious about the potential impact of the ongoing tariff dispute with the U.S. The market's euphoria could be short-lived if the negotiations between the U.S. and the EU break down, leading to the implementation of tariffs. However, for now, the market remains optimistic about the potential resolution of the trade dispute and the continued growth of the German economy.

References:

[1] https://www.marketscreener.com/quote/index/DAX-7395/news/Frankfurt-stock-market-opening-DAX-continues-to-rise-towards-record-high-50466384/
[2] https://www.fxempire.com/forecasts/article/dax-index-news-forecast-eyes-24500-as-tech-gains-and-tariff-talks-lift-sentiment-1531855
[3] https://www.investing.com/news/stock-market-news/germany-stocks-higher-at-close-of-trade-dax-up-130-4128638
[4] https://www.marketscreener.com/quote/index/DAX-7395/news/Frankfurt-Stocks-Close-Higher-Investors-Relieved-Over-Tariff-Dispute-50459807/
[5] https://www.marketscreener.com/quote/index/DAX-7395/news/Frankfurt-stock-market-opening-DAX-rises-slightly-US-tariffs-in-focus-50444680/