The DAX began the Friday trading session positively, extending the record level it had established on Thursday. By 9:30 AM, the leading index was calculated at around 25,745 points, marking a 0.7 percent gain over the previous closing level.
Jochen Stanzl, Chief Market Analyst at Consorsbank, suggested that the index’s initial upward movement was fueled by a US labor market report, which eased interest rate concerns, coupled with a governing reform package that demonstrated the federal government’s capacity. According to Stanzl, cyclical stocks were among the top performers. While the oil price has been low for some time and a resolution to the Iran conflict is long anticipated, he questioned why the market was reacting precisely at this moment.
Stanzl explained that throughout the day, private investors were predominantly positioned for a decline. Many likely doubted that the DAX would achieve a new high given the subdued summer trading conditions. However, a deeper look beneath the market surface reveals a specific factor: the DAX experienced a short squeeze amid what is typically a low-volume summer period. As prices rose beyond previous highs, protective short positions were automatically unwound, thereby generating supplementary buying pressure on the upward trajectory.
Furthermore, the breakthrough was boosted by the start of a sectoral rotation. Investors are shifting away from technology and AI stocks-the favorites of recent months-and showing new interest in underperforming sectors, including gold, Bitcoin, and cyclical stocks. Stanzl concluded that many investors are now uncomfortable with the high valuations of technology stocks and are instead seeking opportunities in laggards that offer a superior risk-to-reward profile based on price-to-earnings ratios.
In currency markets, the Euro strengthened slightly at the start of Friday, trading at 1.1455 US dollars. Correspondingly, the dollar was available for 0.8730 Euros.
Commodity prices also saw shifts. Gold benefited significantly, rising by 1.4 percent in the morning session to 4,175 US dollars per fine ounce, equating to 117.18 Euros per gram. Meanwhile, the oil price increased slightly; a North Sea Brent barrel cost 71.98 US dollars around 9 AM German time, an increase of 18 cents or 0.3 percent from the previous close.
