The DAX gained ground on Tuesday, closing trading at 26,202 points, which represents a 0.8 percent increase compared to the previous day’s close. After a favorable start, the index reached a new high in the morning before fluctuating positively throughout the day.
Andreas Lipkow, Chief Market Analyst at CMC Markets, commented on the rally, noting, “This is the second trading day of the month and the second record, so let’s hope it continues.” He suggested that the surge in German stocks is creating an unexpectedly positive dynamic in the DAX as the typically quiet summer month of August begins. Lipkow attributes the record chase primarily to the falling energy prices, but also to largely positive corporate news, specifically strong quarterly reports and outlooks.
Lipkow described the mood in Frankfurt as generally positive, though not euphoric. Investors are factoring into the stock prices the hoped-for economic recovery for standard German companies, provided they can demonstrate a sustained growth story. Today’s winners included AI and semiconductor firms, alongside pharmaceutical stocks benefiting from better-than-expected earnings from Bayer. Furthermore, the planned merger between AstraZeneca and Bristol-Myers Squibb is fueling industry speculation regarding various possible combinations and potential deals.
However, the analyst cautioned that investors were more hesitant in the consumer and automotive sectors. Quarterly results from Zalando dampened sentiment, as price increases over the past few months are reportedly deterring shoppers. Nevertheless, Lipkow noted that the DAX’s relative strength in recent days is remarkable, driven largely by high demand from foreign investors. He pointed out that, unlike many US companies, German shares are considered to be undervalued, though many investors have been caught off guard this summer and are now playing catch-up.
Infineon, Bayer, and Siemens Energy led the performance list in Frankfurt, while Fresenius Medical Care and Zalando finished at the bottom.
Meanwhile, commodity prices saw changes. Gas prices fell, with one Megawatt-hour (MWh) of September delivery costing 56 Euros, a three percent decrease from the previous day. If this price level is sustained, the implied consumer price would be around 10 to 13 cents per kilowatt-hour (kWh), including ancillary costs and taxes.
Oil prices retreated significantly. A barrel of North Sea Brent crude cost $80.45 on Tuesday afternoon, representing a 4.0 percent decrease, or 332 cents, compared to the previous trading session’s close.
The Euro also strengthened slightly during Tuesday afternoon trading, trading at $1.1517. Consequently, a dollar purchased for 0.8683 Euros.
