The weak phase only lasted a short time, Germany’s leading index is heading back towards its best values. This doesn’t quite fit with the mood in the German economy.
The Dax continued its record run. At the start of trading, the leading German index exceeded the 18,700 point mark. The hope that key interest rates would be cut soon in the USA gave a boost, as did the thin trading turnover on the bridge day after the Ascension Day holiday. On days like this, just a few orders are enough to move the Dax more strongly in one direction or the other.
In the morning, the leading German index rose by 0.6 percent to a good 18,801 points. While the DAX was still weak in April, there are signs of a clear increase of 4.4 percent in the second week of May.
This picture does not quite fit with the latest reports from the German economy. Exports increased again in March. But more and more companies are complaining about a lack of orders, the number of bankruptcies is increasing, and economists only give Germany mediocre ratings.
Corporations active worldwide
But the DAX companies are globally positioned. The 40 companies in the leading index do large parts of their business abroad, where the economy is growing faster than in the home market – for example in the USA and China, but also in many euro countries. The robust US economy is also pulling the German stock market up. In addition, stock investors often do not necessarily focus on the current situation, but rather on future profits.
The MDax of medium-sized stocks gained 0.46 percent to 26,833.08 points on Friday morning. On the European stage, the EuroStoxx 50, the leading index for the Eurozone, rose by 0.55 percent to 5082.45 points.
Impulses from the USA
On Ascension Day, the index finally put an end to the weak phase since the beginning of April by jumping to a record level. Driven by positive foreign trade data from China and US job data, the Dax had climbed almost to 18,700 points.
In the USA, the number of weekly initial jobless claims rose surprisingly significantly, which some investors interpreted as a further indication of a weakening in the labor market. This is exactly what could be crucial for the US Federal Reserve to take a more positive view of the inflation environment and possibly reduce the key interest rate soon.
Individual stocks on this day were primarily driven by analyst comments. The values of the fashion retailer Zalando jumped to the top of the DAX with a plus of 3.2 percent and benefited from a recommendation from Berenberg Bank. Shares in reinsurer Munich Re, upgraded to “buy” by Bank of America, rose 1.7 percent. The shares of the flavor manufacturer Symrise, on the other hand, fell by 1.8 percent at the end of the Dax.
Source: Stern
