Stock Market's DAX Experiences Modest Uptick Due to Earnings Reactions from Investors
German stocks have been making gains in positive territory on Wednesday, bucking a slump in factory orders and U.S. President Trump's threat of tariffs on pharmaceuticals and chips. This resilience can be attributed to strong year-to-date performance, ongoing government investments, and structural reforms that support investor confidence.
The benchmark DAX is up 48.81 points or 0.2% at 23,906.00. Meanwhile, the MDAX indices have outperformed many other European indices this year, buoyed by easing trade tensions and a robust fiscal agenda in Germany.
Despite a 1% month-on-month decline in new orders in June, investors are focusing on Germany’s long-term industrial strategy and reforms aimed at boosting growth. Anticipated double-digit earnings growth for German companies, attractive valuations particularly in the MDAX, and expectations that government investments in infrastructure, defense, and climate protection will support the economy and mitigate trade conflict impacts are also contributing factors.
Some notable performers include Deutsche Bank, which is gaining about 2.1%, and Vonovia, up 2.7%, despite paring some early gains, due to an impressive 11% growth in first-half earnings and a raised EBT guidance for the full-year.
However, not all sectors are performing equally well. Orders from outside the euro area plunged 7.8% in June, and foreign orders declined 3%. This weakness is particularly apparent in sectors such as pharmaceuticals, mechanical engineering, and automotive due to the newly signed EU–US trade pact.
Companies like Beiersdorf are feeling the pinch, with the healthcare group tanking more than 10%, due to a cut in its full-year guidance and weaker-than-expected sales for its core Nivea brand in the second quarter. Fresenius Medical Care is down 2.3%, while Fresenius, a healthcare group, is up 1.3% after posting strong Q2 results and raising its full-year revenue guidance.
Zalando is down nearly 6%, despite delivering "strong" growth in sales and profits during the second quarter and raising its 2025 guidance. Infineon Technologies is down 2.4%. On the other hand, Heidelberg Materials is up 1.7%, and Porsche is up nearly 3%.
BMW, Daimler Truck Holding, Mercedes-Benz, BASF, Volkswagen, and Porsche Automobil Holding are up 1 to 1.4%. Qiagen, Adidas, Merck, and Siemens Energy are down 0.8 to 1.4%.
When large-scale orders are excluded, new orders were 0.5% higher than in the previous month. This suggests that while large-scale orders may be slowing, there is still some underlying strength in the German economy.
In summary, the strength in German stocks reflects investor optimism about structural reforms, fiscal stimulus, and projected earnings growth that outweigh short-term setbacks from disappointing factory data and tariff risks. However, sectors such as pharmaceuticals, mechanical engineering, and automotive may continue to face challenges due to trade tensions and the impact of the EU–US trade pact.
Finance and investing in the German stock market were influenced by various factors, such as strong year-to-date performance, ongoing government investments, and structural reforms that support investor confidence. Ongoing business developments evidenced this resilience, with the benchmark DAX and MDAX indices displaying positive trends, despite a slump in factory orders and U.S. President Trump's threat of tariffs.
