The German DAX index experienced a significant gain on Thursday, closing at 23,279 points – a 0.5% increase compared to the previous day’s close. While the initial positive sentiment persisted throughout the session, a partial reversal occurred in the afternoon, tempering the overall gains. The day’s trading was notably influenced by the ongoing debate surrounding the impact of Artificial Intelligence (AI), a discussion seemingly amplified by Nvidia’s latest financial results.
Christine Romar, Head of Europe at CMC Markets, remarked on the surprising nature of Nvidia CEO Jensen Huang’s commentary. While skepticism regarding a speculative “bubble” in the AI sector was widespread, Huang effectively dismissed these concerns by characterizing the high demand for Nvidia’s chips and the escalating need for computational power as undeniable realities. This pronouncement, Romar suggested, may indicate that current valuations are, in fact, underpinned by a more robust foundation than previously anticipated, prompting a shift in investor sentiment.
The market’s reaction to the Nvidia data was powerful enough to overshadow a stronger-than-expected US jobs report, a development that would typically trigger caution. This resilience, according to Romar, suggests that fears of a potential market correction have been largely priced in. The positive influence clearly extended to the DAX in Frankfurt, which now stands at a crucial juncture, contemplating a test of the key 200-day moving average. A sustained breach of this level could signal a decisive shift in trend, effectively erasing the recent minor pullback to around 23,000 points.
Among the top performers in Frankfurt were shares of Rheinmetall, Qiagen, Siemens Energy and RWE, while Henkel, Symrise and Beiersdorf lagged.
Beyond equities, the energy sector witnessed upward pressure. Natural gas prices rose to €31 per megawatt-hour (MWh) for delivery in December, a 1% increase from the previous day, implying a consumer electricity price of at least 8-9 cents per kilowatt-hour (kWh) if this level persists. Brent crude oil also increased, reaching $63.88 per barrel, a 37-cent or 0.6% rise.
The Euro weakened slightly, trading at $1.1538, making a US dollar worth €0.8667. The unexpected strength and public affirmation of Nvidia’s growth, coupled with the muted reaction to optimistic US employment data, raise questions about the broader market’s preparedness for potential volatility and necessitates a critical reassessment of prevailing risk assumptions. Further observation is warranted to determine if this rally represents a genuine trend reversal or a momentary reprieve from underlying anxieties.
