Stock Markets at Noon: New Year, New Opportunities?
Investor Dax sees early returns on investments
Kickstarting the New Year, the German stock market hasn't shown much traction, except for a brief surge above the 20,000-point mark for the Dax. Market analysts predict it may take several more days for meaningful prices to appear, as more investors jump back in.
As of midday, the Dax hovered around 19,885 points, a minuscule dip of 0.1% from its positive 0.6% gain. Despite the slight setback, the Dax is still keeping a watchful eye on the record high of 20,500 points achieved in mid-December during the year-end rally.
Is it the time for the underdogs to shine?
According to market observer Jürgen Molnar from broker Robomarkets, we might be on the brink of a breakthrough for second and third-tier companies in 2025. Molnar sees considerable catch-up potential in the smaller markets, especially due to potential political tailwinds from Berlin.
Observers believe that the initial days and weeks of a new trading year are usually marked by investor optimism and capital influxes. However, the inauguration of Donald Trump as US President on January 20 could introduce a critical point, with time potentially dragging on until then, according to Lipkow, another market observer.
China's mark on the market
Despite a slow start due to weak economic data, China's new trading year managed to push the Dax into positive territory. Thomas Altmann of asset manager QC Partners pointed out that China's economy has yet to overcome its numerous challenges, as reflected in the weak purchasing manager indices released in the Middle Kingdom.
On the corporate side, news was sparse, and there were few significant stock movements. Notable exceptions include Mutares, which continued its acquisition spree by purchasing Spanish industrial services provider Nervión, and Hellofresh, which gained 6.6% in its stock price due to plans to enter the fast food and frozen food domains with new quick meals.
Automotive industry under pressure
Auto stocks remain under pressure in the Dax, with no signs of improvement following a challenging 2020. Shares for auto supplier Continental and automakers like Porsche AG, Volkswagen, Mercedes-Benz, and BMW all traded lower, ranging from 1% to 3% in the German benchmark index. The eyes of the industry remain fixed on the crucial Chinese sales market, where disappointment over economic data adds to concerns about growing competition from Chinese electric vehicle manufacturers.
Eyeing the renewable energy sector
Looking forward to 2025, energy stocks, particularly those focusing on renewable energy, are attracting investor attention. RWE surged nearly 2% in the Dax, while Nordex saw a 2.4% boost in the MDAX due to order intake numbers from wind turbine competitor Vestas. SMA Solar gained nearly six percent in the SDax after a rough 2024.
With analysts anticipating double-digit earnings growth for second-tier indices and domestic investment chunks expected to benefit mid-cap companies, there's room for optimism for underperforming German companies. As more details emerge, it'll be interesting to see the strategies these companies adopt to capitalize on these opportunities and navigate the challenges ahead.
- Despite the slight dip in the Dax, market analysts, like Jürgen Molnar from broker Robomarkets, foresee a breakthrough for second and third-tier companies in 2025, seeing considerable catch-up potential in smaller markets due to potential political tailwinds.
- Even though automotive stocks continue to face pressure in the Dax with no signs of improvement following a challenging 2020, the renewable energy sector is attracting investor attention, with companies like RWE and SMA Solar showing growth.
- Observers believe that the initial days and weeks of a new trading year are usually marked by investor optimism and capital influxes; however, the inauguration of Donald Trump as US President on January 20 could introduce a critical point.
- In the corporate world, notable exceptions include companies like Mutares and Hellofresh, which continued acquisitions and made stock price gains due to plans to enter new domains.
- According to Thomas Altmann of asset manager QC Partners, despite a slow start due to weak economic data, China managed to push the Dax into positive territory for the New Year, but concerns remain about China's economy and growing competition from Chinese electric vehicle manufacturers.
