The Dax has exceeded the 20,000 point mark for the first time. The leading German index rose by 0.35 percent to 20,003 points on Tuesday. Within just one year, the DAX has risen by around 3,000 points. It was only in mid-September that it broke the round mark of 19,000 points, in mid-March it hit 18,000 points – and in December of last year it had risen to over 17,000 points.
The hope of further falling interest rates in the USA and the Eurozone has been driving the Dax higher for months. In view of the recent significant fall in inflation, investors are betting that the central banks will further reduce key interest rates and thus stimulate the sluggish economy, particularly in Germany. Rising prices on Wall Street also gave the Dax a boost.
The prospect of falling interest rates is good news for equity investors. Stocks are becoming more attractive again compared to fixed-interest securities. Loans are becoming cheaper, companies can therefore finance themselves more easily, and investments are becoming more affordable.
The development on the stock markets contrasts with the poor economic situation in Germany. However, investors often do not necessarily focus on the current situation, but rather on future profits. In addition, most of the 40 companies listed in the DAX are internationally positioned: Germany is just one market among many.
There is now a profit of almost 19 percent for the stock market year 2024. This strong annual performance should attract more buyers, it said. Rising prices at the end of the year are typical. On the stock market, the phenomenon is known as a “year-end rally”.
Party mood after the US election
There has also recently been a tailwind for the prices from solid economic data from China. Traders also referred to the current budget and government crisis in France. Investors could therefore shift investments to Germany.
The election of Donald Trump as the new US President at the beginning of November put the financial markets in a party mood, at least in the USA. Because Trump has promised tax cuts, less regulation and high tariffs on imports. However, experts fear that inflation in the USA will rise again due to higher import tariffs.
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