Stock price of Dax significantly surges following Trump-induced market crash
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A month after the turbulence stirred by Donald Trump's tariffs, the leading index has reached an unprecedented high. The surge was surprising.
Upon market opening, the DAX rose by 0.5 percent, reaching 23,484 points, surpassing the previous record of 23,476 points. A more modest opening was anticipated.
Following the trade agreement between the USA and the UK, the stock markets ended the day in profit on Thursday. The German leading index closed 1 percent higher at 23,352.69 points. The US stock markets also reacted positively to the trade agreement, although not enthusiastically.
Economy & Global Trade
China's economy is the focus for the week's end. According to custom data, China's exports climbed by 8.1 percent year-on-year in April, whereas imports dwindled by 0.2 percent. These figures run counter to the predictions of experts who anticipated a sharper drop in trade due to the trade clash with the US.
Source: ntv.de, chl/DJ/rts
- DAX Rally: Behind the Scenes
The DAX's unexpected rally to near record highs following the tumult caused by former U.S. President Donald Trump's tariffs can be attributed to a combination of factors, encompassing both domestic political transformations and improvements in global trade relations.
Key Factors driving the DAX Surge
1. New German Political Leadership: Boost to Confidence
The emergence of a new coalition government in Germany, spearheaded by the conservative Christian Democratic Union (CDU) under Friedrich Merz, has boosted market credibility. This coalition's agenda promotes economic growth, increased defense spending, tighter immigration policies, and modern infrastructure updates. The political clarity and stimulus plan have significantly contributed to investor optimism, manifested in the DAX's rise towards historic highs [1][5].
2. Tariff Concerns Easing: Relief for Key Sectors
Initially, Trump's tariffs targeted European exports, particularly the automotive sector, casting shadows over German industrial stocks. Recent developments signaling potential tariff relief have aided in reviving the German market. The prospect of a U.S.-EU trade deal and improving transatlantic trade relations have been key catalysts for the DAX's gains [1][3].
3. Positive Global Trade Landscape
Beyond U.S. tariff relief, broader favorable global trade conditions have strengthened the DAX's upward trend. New trade deals and diminishing geopolitical tensions have enhanced the outlook for German exporters and the sectors dominated by manufacturers in the DAX. Global trade optimism aligns with robust performances in essential sectors such as industrials and automotive [2][5].
4. Market Technicals and Momentum: Positive Pulse
The DAX has displayed a robust momentum, with considerable gains in recent trading sessions. Over early May 2025, the DAX approaches its all-time highs, standing barely 0.29% away from the record close of 23,419.48 recorded in March 2025. The index has swelled roughly 24.97% over the course of the previous year and 17.3% year-to-date, underscoring sustained investor confidence despite earlier recessionary concerns [4][5].
5. Contrasting Economic Data: Optimistic Investors
Although Germany's GDP shrank slightly (0.2% YoY in Q1 2025), suggesting ongoing economic hurdles, the market rally reflects investor faith in a revival led by government policies and trade improvements. On the other hand, competitive strength in other regions, such as the UK's GDP growth and anticipated interest rate reductions, indicates a broader optimistic economic sentiment supporting equity markets, including Germany's [1].
Expert Views and Further Analysis
- Experts describe the recent decline in April as "healthy," considering the sharp 23% ascent from April lows to early May highs. They view the current pause as a temporary respite before potential further gains [5].
- The new coalition's fiscal stimulus, especially increased spending on defense and infrastructure following the relaxation of Germany’s debt brake, is projected to sustain cyclical stocks and sector leaders such as Siemens and Volkswagen[5].
- Technically, breaking above the DAX's record high near 23,476 points may open the door for testing resistance levels around 23,750, suggesting further upside potential contingent upon positive trade and economic developments continuing [3].
- Despite 7 consecutive quarters of recession according to GDP figures, market participants seem to be valuing future growth underpinned by government reforms and global trade normalization [1].
- The tariffs instigated by former U.S. President Donald Trump initially created turbulence for the European markets, particularly the automotive sector, but recent signs of potential tariff relief have aided in the recovery of the German market.
- The unexpected DAX rally towards record highs can be attributed to a combination of factors, including the emergence of a new coalition government in Germany, improvements in global trade relations, and positive market technicals and momentum.
- The new German coalition, led by Friedrich Merz and the conservative Christian Democratic Union (CDU), has boosted market credibility with its agenda promoting economic growth, increased defense spending, tighter immigration policies, and modern infrastructure updates.
- The DAX, despite a slight decrease in Germany's GDP, reflects investor faith in a revival led by government policies and trade improvements, with potential further gains expected according to expert analysis.
