German Dax Rises as SAP's Record High and Job Cut Announcement Boost Market Performance

SAP's stock surge propelled the Dax index to near-record levels, while the MDax of mid-caps fell slightly. SAP plans to cut 9,000-10,000 jobs instead of 8,000, expecting cost savings by the end of next year. Despite a series of lowered annual targets among companies, Sartorius and Porsche stocks showed notable gains and declines, respectively. Traders highlighted positive results from life science firm Danaher and lowered forecasts from US truck maker Paccar and drive specialist Vitesco.

In a remarkable turn of events, SAP's (SAPG.DE) stock surge on Tuesday propelled the German DAX index to near-record levels, despite a slight dip in the MDax of mid-caps. This upward trend comes in the wake of SAP reporting better-than-expected second-quarter financial results, showcasing robust revenue growth and effective cost-cutting measures [1].

Europe's largest software company reported a 33% increase in adjusted second-quarter operating profit, reaching a substantial 1.94 billion euros ($2.1 billion), surpassing analyst estimates [1]. As a result, SAP's shares rose by 6%, reaching an all-time high of 151.25 euros [1]. This impressive performance contributed significantly to the recovery of the DAX index, which had experienced a challenging year due to a series of lower annual targets among companies [2].

SAP also announced plans to increase its restructuring efforts, affecting approximately 9,000 to 10,000 positions, up from the previously announced 8,000 in January [1]. The company aims to offer affected employees opportunities to be retrained with artificial intelligence (AI) skills or voluntary buy-out packages. This proactive approach to transformation aligns with SAP's commitment to becoming the leader in Business AI [1].

While SAP's positive results were a significant contributor to the DAX's growth, the performance of other stocks in the index varied. For instance, shares in life science firm Danaher (DHR.DE) experienced notable gains, driven by positive results in its recent earnings report [3]. Conversely, shares in US truck maker Paccar (PCAG.DE) and drive specialist Vitesco (VSC.DE) declined due to lowered forecasts [3].

In the face of these contrasting trends, the DAX index remains poised for continued growth, with SAP's successful transformation efforts serving as a promising indicator for the German economy [4].

References:

[1] Reuters. (2024, July 23). SAP shares all-time high after adjusted profit beats market view. Retrieved from https://www.reuters.com/technology/sap-shares-all-time-high-after-adjusted-profit-beats-market-view-2024-07-23/
[2] MarketScreener. (2024, July 26). Frankfurt Stock Exchange Opening: Record high SAP share price drives Dax recovery. Retrieved from https://www.marketscreener.com/quote/index/DAX-7395/news/Aktien-Frankfurt-Eroffnung-Record-high-SAP-share-price-drives-Dax-recovery-47441704/
[3] Reuters. (2024, July 25). European shares end higher, but Paccar and Vitesco drag STOXX down. Retrieved from https://www.reuters.com/business/europe/european-shares-end-higher-but-paccar-and-vitesco-drag-stoxx-down-2024-07-25/
[4] Deutsche Welle. (2024, July 26). Germany's DAX rises to new record high as SAP shares surge. Retrieved from https://www.dw.com/en/germany-s-dax-rises-to-new-record-high-as-sap-shares-surge/a-63024369