German equities opened Tuesday trading with gains, driven by a shift in investor sentiment. By 9:35 AM, the leading DAX index was calculated at approximately 24,115 points, representing a 0.6 percent increase compared to the previous day’s closing level. Siemens Energy, Infineon and Siemens Healthineers were among the top performers, while BASF, Vonovia and Volkswagen lagged at the lower end of the ranking.
“The optimism amongst investors has been significantly dampened by yesterday’s turnaround in the DAX” stated Jochen Stanzl, Chief Market Analyst at CMC Markets. The expectation of reaching new record highs has temporarily receded. He noted a complete unwinding of short-term speculative positions and a notably negative reaction to the recently agreed-upon customs deal with the United States, a contrast to the more resilient market performance observed in previous weeks despite adverse news.
Stanzl explained that the change in market mood stems from the concrete nature of the agreement. “It’s no longer possible to gloss over the details. The figures are out in the open. The deal carries the same weight as any agreement reached in such a short timeframe”. This newfound certainty introduces a disruptive element, transforming the DAX’s uncertainty into a more assured – and negatively perceived – reality. “Detailed calculations regarding the impact of tariffs, which are now roughly four times higher than before, are painting a rather bleak picture. The burdens are now a fact and are outweighing the potential benefits of increased planning certainty.
However, the market expert added a note of caution regarding the technical and psychological condition of the stock market. “A key support level at 23,900 points has been successfully defended, despite predominantly selling pressure throughout yesterday. This demonstrates that there remains buying interest at this level, or at least a reluctance to sell”. This offers a glimmer of hope for the current trading day.
“The 23,900 points level is, therefore, a lifeline for investors in the short term. It could become uncomfortable if that lifeline breaks” Stanzl warned. Should the DAX sustainably fall below this level, the risk of a genuine sell-off could intensify, potentially amplified by automated stop-loss orders. “The DAX is, figuratively speaking, currently walking a knife’s edge”.
