The German DAX index registered a notable increase on Wednesday, closing at 25,122 points – a 0.9% gain compared to the previous day’s close. Following a positive opening, the index continued to expand its upward trajectory throughout the trading session.
Market analyst Andreas Lipkow characterized the DAX’s relative strength as “remarkable” albeit not unexpected for the start of a trading week. He noted a persistent high demand for German blue-chip stocks, currently concentrated in heavyweight companies and those within traditionally defensive sectors.
However, Lipkow’s assessment introduced a layer of critical perspective. The market’s apparent resilience, he argued, is striking considering the prevailing weakness in underlying German economic indicators and a cooling US labor market. The persistent uptrend, bouncing off the 25,000-point mark, suggests a disconnect between investor sentiment and fundamental economic realities. He cautioned that this dynamic is unsustainable, predicting a likely reversal “when the allocation of institutional investors is completed at the start of the year”. This suggests a substantial portion of the current rally may be driven by portfolio rebalancing rather than genuine long-term confidence.
Throughout the day, shares of Zalando, Rheinmetall and Siemens led the gainers, while Scout 24, Beiersdorf and Deutsche Börse lagged behind.
Adding to the complex economic picture, natural gas prices saw a rise, with February delivery futures reaching €29 per megawatt-hour (MWh), representing a 2% increase from the previous day. This translates to a potential consumer price of at least 7-9 cents per kilowatt-hour (kWh) inclusive of taxes and fees, posing a potential strain on household budgets and fueling inflation concerns despite broader disinflationary pressures. The rise is a worrying sign given the ongoing efforts to stabilize energy costs in the region.
Conversely, crude oil prices declined, with Brent North Sea crude fetching $60.25 per barrel, a decrease of 0.7% from the previous trading day’s close. This decrease offers a slight respite from inflationary pressures, but its long-term impact remains uncertain.
The euro also depreciated slightly against the dollar, trading at $1.1686. This decline reflects broader anxieties surrounding economic divergence between Europe and the United States, potentially signaling continued investor hesitation regarding the euro’s stability.
