The German benchmark index, the Dax, maintained its bullish performance on Wednesday, continuing in positive territory until midday. Around 12:30 p.m., the index was calculated at 25,400 points, representing a gain of 0.6 percent compared to the closing level of the previous trading day. Among the top performers were Rheinmetall, Vonovia, and MTU, while Zalando, Hannover Rück, and Volkswagen finished at the bottom of the list. Meanwhile, investors are keenly awaiting new inflation data from the United States, scheduled for release at 2:30 p.m. Another rise in inflation is considered likely.
Andreas Lipkow, Chief Market Analyst at CMC Markets, commented on the growing investor uncertainty, stating that many question whether German stocks remain the appropriate choice given the high yields being offered by bonds. Disappointments from good US quarterly figures yesterday, coupled with Blackrock’s announced reallocations towards government bonds, have left noticeable effects on the market. “Such new allocations are often not short-term decisions; they can initiate a fundamental and longer-lasting strategic shift,” Lipkow said.
According to Lipkow, the investment calculus is steadily changing. High bond yields offer attractive returns, while the high valuations seen in the stock market are increasingly difficult to justify. If inflationary pressure eases concurrently, government bonds stand to benefit even more strongly. This could lead to a sustainable flow of capital toward the bond market, shifting competition away from equities.
