Dax achieves a new peak in performance - Dax achieves an unprecedented peak in his career.
The DAX stock index reached an all-time high on Tuesday, surpassing 24,161 points, despite ongoing uncertainties. This year, the German benchmark index has already recorded a significant 21% increase, contrasting the current downturn in the US markets.
Investors eagerly awaited the reopening of US stock markets, shuttered on Monday for a holiday, with indications pointing towards gains in New York. This potential resurgence reflects relief following US President Donald Trump's reprise on tariff threats and the granting of a reprieve to Europe.
Meanwhile, the continued focus remains on the ongoing stalemate in the Ukrainian conflict. As NATO nations discuss an escalation of defense spending to reach 5% of their GDP, defense stocks continue their record-breaking rally. German Chancellor Friedrich Merz (CDU) announced the lifting of restrictions on the use of German weapons against Russian territory.
Key defense stocks, including Rheinmetall, Renk, and Hensoldt, listed both on the DAX and MDax, have witnessed a stellar performance with new record highs. Rheinmetall shares peaked at up to 1,883 euros in early trading, having already tripled in value this year. This growth follows the Russian attack on adjacent countries last year, placing their market value at more than 20 times its original worth.
Amid this stock market boom, analysts attribute the rise to a mix of easing geopolitical tensions, particularly regarding trade, solid quarterly reports, and improved inflation data. Additionally, the planned German state investment package, worth up to 500 billion euros for infrastructure and climate protection, is instilling optimism among traders.
The trade conflict between the US and China, the world's two largest economies, has weighed heavily on financial markets for weeks. However, concerns over a global recession persist as it remains uncertain whether trade relations between the two nations will normalize.
It’s worth noting that the surge in defense stocks, such as Rheinmetall, is a result of increased government defense spending in response to ongoing conflicts like the Ukrainian war, rising tensions in the Middle East, and broader security concerns. Defense contractors like Rheinmetall are directly benefiting from these military budget increases and dining on robust earnings and order backlogs.
Lastly, the rally is fueled by global rearmament trends, as defense and energy stocks across regions have recorded impressive gains. This broad-based rally reflects the growing demand for military equipment, technology, and services in the face of ongoing geopolitical instability.
The Commission has also proposed a Council regulation for investing in real-estate and stock-market projects, aimed at financing environmentally protective measures. This new proposal aligns with the increase in funding for defense, as layered securities, such as those in the stock-market, like Rheinmetall, are seen as viable options for this investment.
Consequently, the planned German state investment package, focusing on infrastructure and climate protection, might potentially extend to finance ventures involving environmentally friendly real-estate investing, thereby fostering a sustainable and secure financial environment.
