The DAX started the week with gains, closing the Xetra trading session at 25,817 points, which represented a 0.2 percent increase from the previous day. This result reached a new high closing price. According to Andreas Lipkow, Chief Market Analyst at CMC Markets, the DAX has reached a new record high, coming close to 25,900 points, and is well on its way to testing the next round figure in the coming days.
Investors were drawn to cyclical sectors, bolstered by positive fundamental data, specifically German industrial orders and producer prices from the Eurozone. Lately, European markets have seen a rotation away from technology stocks and toward shares in traditional, or ‘Old Economy,’ businesses. This shift is supported by seasonal investment allocation and the prospect of economic stabilization. Furthermore, decreasing prices and resulting lower inflation concerns have contributed to the positive market momentum.
However, Lipkow noted that both the breadth of the market and overall investor interest in the German stock market still require improvement. He cautioned that the industry rotation alone may not be sufficient for the DAX to sustainably surpass the 26,000 mark in one go.
In the defense sector, shares benefited from the ongoing (though difficult) negotiations between Russia and Ukraine. Given that the US-moderated talks are progressing slowly and have yet to deliver expected success, the situation appears complex and unlikely to resolve quickly. Consequently, investors remain focused on stocks like Rheinmetall, Renk, and Hensoldt. Increased consolidation pressure is also emerging in the sector, with Thales’ planned takeover of drone specialist Exail expected to inject new dynamism.
Meanwhile, in high-valued technology sectors, investor reservations persist, making many hesitant to purchase. There is growing skepticism among analysts regarding which companies will truly benefit from the investment dynamism in the AI sector. Lipkow commented that the era of broad sector buying is over, giving way to a period focused on careful stock selection.
In other global markets, the European community currency weakened on Monday afternoon. The Euro exchanged for 1.1419 US Dollars, while the Dollar traded for 0.8757 Euros. The price of gold saw a decline, trading at $4,150 per troy ounce in the afternoon (-0.6%), translating to €116.83 per gram. Conversely, the price of oil rose slightly; Brent crude, traded in the North Sea, cost $72.13 per barrel around 5 PM German time, representing an increase of a mere cent (+0.0%) compared to the previous session’s close.
