Stock prices for DAX are inching up slightly, with Adidas leading the pack.
The German stock market, as measured by the DAX, experienced a modest gain on Thursday, closing at 15,202.68 points, an increase of 0.17 percent compared to the previous day. This rise was partly attributed to positive industrial data and the continuation of loose US monetary policy.
The European common currency strengthened on Thursday afternoon, with one euro being worth 1.1902 US dollars, marking a 0.3 percent increase. Simultaneously, one dollar was equivalent to 0.8402 euros, a slight decrease from the previous day.
Individual companies saw mixed results. Shares of BMW, Delivery Hero, and RWE all saw gains, with BMW's shares increasing and Delivery Hero and RWE both experiencing gains on Thursday. However, Covestro shares experienced the biggest losses, falling by over two percent. Shares of Volkswagen AG remained stable, while Merck KGaA, Deutsche Telekom, Linde, Deutsche Bank, Daimler, and Uniper all saw losses.
Adidas led the gains, with shares increasing by over two percent. Siemens Gamesa Renewable Energy also saw gains, while Thyssenkrupp experienced a slight decrease in share price.
The performance of the DAX and individual share prices is influenced by several key factors. These include macroeconomic growth and earnings expectations, sector-specific and company factors, geopolitical developments, and US economic policy and trade.
Analysts forecast about 4% earnings growth for the DAX in 2025 and around 15% in 2026 and 2027, driven mainly by finance, IT, and industrial sectors. GDP growth of approximately 1.6% in 2026 could boost earnings per share by 6%. Investments related to defense, infrastructure, energy transition, and digitalization particularly benefit companies involved in those sectors.
Automakers like Daimler are somewhat affected by US tariffs but have local production that buffers the impact. Chemical and industrial companies, like Covestro, typically have low US revenue exposure and are less impacted by tariffs. Service-oriented firms such as Deutsche Bank (finance) and Delivery Hero (technology/food delivery) are usually less affected by trade tariffs. Corporate earnings reports, such as from industrial giants like Rheinmetall, influence investor sentiment.
Geopolitical developments, such as the Alaska Summit (U.S.-Russia talks on the Ukraine conflict), can strongly affect market sentiment and the DAX's trajectory. A failure to reach agreements causes volatility in defense stocks and energy prices, creating correction risks for the DAX.
The US economic slowdown or trade policy changes (e.g., tariffs and Federal Reserve rate decisions) affect German exporters and DAX earnings prospects. Reduced demand from the US would negatively impact companies with significant export exposure.
The Euro-dollar exchange rate is influenced by monetary policy decisions primarily by the Federal Reserve and the European Central Bank. Expectations around Fed rate cuts or holds, combined with inflation outlooks and labor market conditions in the US, strongly drive the EUR/USD rate movements. Geopolitical events such as the Russia-Ukraine conflict also impact investor risk appetite, causing fluctuations in safe-haven demand, which in turn affects the Euro-dollar exchange rate.
In summary, the DAX and its major constituents’ share prices are shaped by a combination of GDP and earnings growth expectations, sector-specific factors like trade exposure, geopolitical developments, and central bank policies, while the Euro-dollar exchange rate reflects monetary policy outlooks and global geopolitical risks. This interplay results in a dynamically evolving market environment affecting valuations and currency valuations.
An email has been sent to shareholders regarding the company's financial performance, providing more detailed information about the current market conditions and the future outlook for the companies listed on the DAX.
The finance industry plays a significant role in shaping the DAX and its constituents' share prices, as earnings growth expectations for the industry are projected to drive earnings for the DAX in 2025 and beyond. The Euro-dollar exchange rate, another key factor in the global business landscape, is primarily influenced by monetary policy decisions from both the Federal Reserve and the European Central Bank.
