To conclude the week, the Dax saw a significant increase. The index closed on the Xetra exchange at 25,623 points, marking a 1.0 percent gain compared to the previous day’s close, as the index built on its positive start throughout the trading day.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that the Dax “took a vigorous gulp at the end of the week, jumping above the 25,600-point mark.” He pointed out that shares in the cyclical automotive sector, along with defensive pharmaceutical and healthcare stocks, performed particularly well. Lipkow also attributed this support to the decline in government bond yields, which makes stocks more appealing. Furthermore, investors seem optimistic that central banks will hold off on implementing further interest rate hikes despite recent inflation data.
While high energy prices continue to be a drag, Lipkow suggested that the “inflation soup” is currently not as fiercely contested in the markets as it was recently. However, he warned that the current recovery does not yet represent a fundamental change in market sentiment. Instead, markets appear to be correcting the heightened nervousness from earlier trading days; a sustainable upward trend will only emerge when fundamental arguments regain convincing strength.
On Wall Street, the hope for a continuing AI boom is keeping equity markets at elevated levels, the analyst stated. Nevertheless, he cautioned that this rally is increasingly driven by only a few large technology corporations. While the S&P 500 is trading close to its record highs, more than 200 of its index members are down by over 30 percent, indicating that the underlying market is far less robust than the glossy index façade suggests.
Lipkow anticipates that the upcoming earnings report week will serve as the next crucial stress test. Although earlier figures from TSMC and ASML have provided initial positive signals, they have not yet been sufficient to dispel doubts regarding the profitability of the massive AI investments. The large US hyperscalers must now demonstrate with concrete numbers that their multi-billion dollar investments are yielding corresponding returns.
In Frankfurt, Rheinmetall shares topped the list of strongest performers near the close on Friday, followed by stocks for automakers BMW, Volkswagen, and Mercedes-Benz. Only Symrise, Qiagen, Infineon, and SAP posted losses, running counter to the overall trend.
Separately, the price of gas climbed, with one megawatt-hour (MWh) delivered in November reaching 88 Euros, a 1 percent increase from the previous day. If this price level remains steady, the resultant consumer price would be around 14 to 16 cents per kilowatt-hour (kWh), including taxes and ancillary costs. Conversely, the price of oil remained nearly unchanged, with a barrel of North Sea Brent crude trading at $105.90 US dollars on Friday afternoon at 5 PM Central European Time. The Euro strengthened against the US dollar on Friday afternoon, with one Euro trading at $1.1245, and one dollar fetching 0.8893 Euros.
