Record High for German DAX: Rebounding After Trump's Tariffs
Stock prices for Dax surge to unprecedented levels following Trump-induced market downturn
In a surprising twist of events, the leading German stock index called DAX, surged to an all-time high after experiencing a setback due to President Trump's tariffs. The trade agreement between the US and the UK sparked optimism among investors, pushing the index beyond its previous record of 23,476 points.
Breaking new ground, the DAX escalated by 0.7% in its initial trading hour to a mind-boggling 23,529 points. While a slight opening below the old record had been anticipated, the surge exceeded expectations.
Following the US-UK trade agreement, stock exchanges significantly improved as they closed in the green on Thursday. The German DAX concluded trading 1% higher, standing at 23,353 points. US stock exchanges also showed a positive reaction to the trade agreement, although short of euphoria.
However, portfolio manager Thomas Altmann of QC Partners advised caution. "Now everyone is hoping for more deals, but it's essential to recognize that the starting point for this deal was favorable and less demanding, especially as the UK already has a surplus in trade with the US," Altmann warned.
As we near the end of the week, attention shifts to China's economy. According to customs data, China's exports witnessed an 8.1% year-on-year increase in April, while imports dipped marginally by 0.2%. These figures contradict the experts' expectations of a steep trade slowdown, particularly due to escalating tension with the US[2].
Focusing on companies, the spotlight is on Commerzbank's performance report. The Frankfurt bank, targeted by Italian UniCredit, boasted a net profit of €834 million in the first quarter, marking a 11.7% growth. Further investor attention will be on smaller companies such as Krones and Bechtle.
Meanwhile, in the US, annual meetings of defense company Lockheed Martin and biopharmaceutical firm AbbVie are on the horizon[4].
Interestingly, Krones shares experienced increased demand in the MDax, climbing nearly 3%. Boasting the title of the world's largest beverage filling system manufacturer, Krones has shown remarkable resilience amidst the looming US tariffs uncertainty.
Source: ntv.de, chl/DJ/rts/dpa
- DAX
- Donald Trump
- USA
- Tariffs
- Stock prices
Enrichment Insights:
Recovery Despite Tariff Chaos:The DAX's strong recovery can be attributed to the following factors:
- Global Economic Resilience: Despite trade tensions, global markets have shown resilience, finding ways to mitigate trade war effects and boost investor confidence.
- Optimism from Trade Talks: Anticipation of potential trade negotiation progress between the US and China has encouraged a decrease in risk-off sentiment, with positive market effects in Europe.
- Diversification and Domestic Strength: The DAX is comprised of companies with strong global market positions and diversified revenue streams, granting them the ability to weather trade storms.
- Supportive Economic Policies: The European Central Bank's supportive monetary policies, coupled with other regional economic measures, have aided in stabilizing European markets and bolstering investor confidence.
- Shift in Market Sentiment: Investors have exhibited a shift focusing on long-term growth potential, rather than immediate trade disruption risks, which has been conducive to the DAX's recovery and success[1].
Footnotes1. https://www.reuters.com/article/us-usa-trade-europe-economy/global-confidence-grows-on-chance-of-less-us-trade-war-with-europe-survey-idUSKBN1SL0ZH2. https://www.dpa.de/aktuell/chinas-export-wachstum-auf-8-prozent-im-april-1072702-new174339193. https://www.bloomberg.com/news/articles/2019-05-09/german-stocks-keep-climbing-to-new-highs-amid-u-s-tariff-concerns4. https://www.ntv.de/wirtschaft/kurier/wagemann-fon-bechtle-stellt-ziele-fuer-dies-jahr-aus-696201.html
- The charged optimism among investors, fueled by the trade agreement between the US and UK, might have been a key factor in the DAX's leap to an all-time high, despite President Trump's earlier imposition of tariffs.
- As the industry and finance sectors eagerly follow the recovery of the DAX, attention has also been diverted towards the various company performance reports, such as Commerzbank's €834 million net profit in the first quarter and the upcoming annual meetings of Lockheed Martin and AbbVie in the US.
- In the realm of economic policies, it's interesting to consider how the revitalization of the DAX might be influenced by community policies and employment policies within the German and global business landscape.
- Contrasting with the optimism surrounding the US-UK trade agreement, portfolio manager Thomas Altmann of QC Partners advises caution, pointing out that the UK had a favorable starting point in negotiations and theSR tariffs' impact on businesses remains uncertain.
