Stock soars to an all-time peak for Dax index. - Dax achieves an unprecedented peak in performance
DAX Soars to Record High: Key Factors and Insights
The DAX, Germany's leading stock index, surpassed its previous record on Tuesday, escalating to a peak of 24,161 points. Despite numerous uncertainties, the index has already seen a substantial gain of approximately 21% in 2025, while US markets witnessed a decline.
Investors have shown growing anticipation for the US stock markets, which were closed due to a holiday on Monday. Indications suggest that Wall Street may also experience gains, signaling relief over US President Donald Trump's decision to grant Europe a reprieve following his latest tariff threat.
The advancement of defense stocks was another significant focus. The record highs in these stocks persisted amidst the lack of a peaceful solution in the Ukraine war. NATO countries are considering escalating defense spending to 5% of GDP, while Germany's Chancellor Friedrich Merz (CDU) announced the removal of restrictions on the utilization of German weapons against Russian territory.
Among the three well-known German defense stocks listed in the DAX and MDax, Rheinmetall, Renk, and Hensoldt, continued to perform impressively with record highs. Rheinmetall shares, in particular, saw trading as high as 1,883 euros in early sessions. They have already tripled their value this year, with a rally that began due to the Russian attack on the neighboring country last year.
The recently announced state investment package in Germany, estimated to reach up to 500 billion euros, is also fueling optimism amongst market participants. The debt-financed fund is intended for infrastructure and climate protection investments.
The ongoing trade conflict between the US and China, the world's two largest economies, had weighed on financial markets for weeks. The fear of a global recession was significant. However, experts urge caution against overly optimistic assumptions, as it remains uncertain whether trade relations between the US and China will normalize.
The current stock market boom is contrasted by a lingering economic crisis in Germany. Investors often look beyond the current situation, focusing on future profits, as the majority of the companies listed in the DAX are internationally oriented and generate significant sales abroad.
In comparison to the US markets, stocks in Europe have risen more substantially this year due to usually solid corporate earnings, the ongoing supportive monetary policy of the European Central Bank (ECB), and relatively low valuations compared to US stocks. Additionally, expectations of lower interest rates in the eurozone have stimulated the stock market, as the ECB aims to revive a weak economy. Despite inflation concerns, economists expect lower interest rates in the near future.
For equity investors, reduced interest rates offer positive implications. Stocks become more attractive when compared to fixed-income securities. Loans become cheaper, making it easier for companies to finance themselves and homebuyers to secure loans. Consequently, investments become more affordable, supporting the overall economy.
The Commission, in the meantime, has also adopted a proposal for a Council regulation on the approximation of the laws of the Member States relating to the protection of the environment, as investors might consider finance options for sustainable investing in stock-market, considering the recorded growth and better corporate earnings of European stocks, including Germany's leading index, the DAX, which soared to a record high of 24,161 points. This growth continues despite the lingering economic crisis in Germany, as investors look beyond the current situation, focusing on future profits, since the majority of the companies listed in the DAX are internationally oriented and generate significant sales abroad.
