Starting the week with a significant gain, the Dax closed at 26,267 points on the Xetra trading platform, representing a 1.7% increase from the previous day’s close.
Andreas Lipkow, Chief Market Analyst at CMC Markets, attributes the index’s recovery above the 26,000 mark to optimism regarding the easing of geopolitical conflicts. He stated that potential progress in peace efforts across Ukraine and the Middle East is causing a noticeable reduction in geopolitical risk premiums. This renewed sense of confidence is particularly evident in energy markets, where North Sea Brent crude has dropped by more than four percent, providing a substantial tailwind for European equities.
Low energy prices generally signal good news for the stock markets, as they simultaneously ease costs for companies, boost consumer purchasing power, and lessen concerns about a fresh inflationary surge. This situation could also potentially reduce pressure on central banks to further tighten monetary policy. However, Lipkow cautioned that current geopolitical developments remain speculative; the market is beginning to price in potential easing, but concrete political solutions are still pending.
Furthermore, the Dax received a boost from surprisingly robust German export figures. In September, exports climbed by 2 percent, significantly surpassing the expectation of only 0.5 percent. While imports rose disproportionately, narrowing Germany’s trade surplus, the data provides further support for the hypothesis of a gradual economic recovery. For Germany’s export-oriented industrial companies, a sustained revival in international demand would serve as a crucial impetus.
Risk appetite is also returning to the technology and semiconductor sectors. Investors are growing bolder following the sharp declines seen in recent trading days, causing the recent worries regarding the long-term viability of the AI boom to fade momentarily. While news of investigations linked to Nvidia CEO Jensen Huang primarily pressures the semiconductor giant itself, the outcome remains uncertain. Currently, there is no indication that this news is causing broader contagion across the entire technology sector.
For the Dax, re-securing the 26,000 point level is a significant positive signal. Lipkow suggested that if the easing trend in energy markets continues and the recovery in US technology stocks persists, the German benchmark index could soon target an all-time high, putting the year-end rally back in play, though geopolitical dangers remain a potential derailer.
In global markets, the Euro strengthened on Monday afternoon, trading at 1.1201 US dollars, while the dollar was valued at 0.8928 Euros. Meanwhile, gold benefited substantially, climbing 1.1 percent in the afternoon sessions to reach $4,116 per fine ounce, equating to €118.14 per gram.
