The German DAX index continued its upward trajectory Thursday, extending its record-breaking run fueled more by investor sentiment than concrete economic data. By 9:30 AM, the benchmark index reached approximately 25,170 points, a 0.2 percent increase from the previous day’s closing level. Rheinmetall, Bayer and Daimler Truck led the gains, while Zalando, FMC and Adidas trailed at the end of the session.
Jochen Stanzl, chief market analyst at Consorsbank, attributed the nearly ten percent climb since mid-November largely to psychological factors. “Investors are now fearing a missed opportunity, recalling the unchecked rally seen at the beginning of last year” Stanzl stated, highlighting a common anxiety within the market – the fear of being left behind.
However, Stanzl cautioned that this reliance on sentiment introduces considerable risk of abrupt reversals. He emphasized the need for sustained trading volume to validate the current upward momentum and warned against a significant dip below the 25,000-point mark, which was only recently breached. Such a move, he argued, could swiftly undermine positive investor perceptions.
The euro weakened slightly Thursday morning, trading at $1.1674, with the dollar fetching €0.8566. This depreciation is being watched closely, potentially reflecting broader concerns about the economic outlook within the Eurozone and its impact on export-dependent German companies.
Oil prices also saw a modest uptick, with a barrel of Brent North Sea crude fetching $60.06, a slight increase from the previous day’s close. While seemingly minor, this price fluctuation contributes to the overall inflationary pressures that policymakers are currently navigating, particularly as the European Central Bank contemplates future interest rate decisions. The disconnect between the soaring DAX and underlying economic realities – coupled with the influence of sentiment-driven investment – presents a complicated and potentially precarious landscape for the German economy.
