The DAX reached a new record high on Monday, rising by 1.57% and approaching the 20,000 mark. This rally was driven by strong performances in the technology, finance, and industrial sectors, despite ongoing challenges in the German economy.
Year-to-date, the DAX has climbed 19%, making it the top-performing European index, while the Pan-European STOXX index rose just 7%. In comparison, the S&P 500 gained 27%, and China’s A50 increased by 15%.
Key Sectors Drive the Growth
The DAX’s strong performance is largely due to impressive growth in specific sectors. SAP, Germany’s largest tech company, saw its stock jump 65% thanks to its focus on artificial intelligence. This has helped SAP become Europe’s largest tech firm.
The financial sector also played a role, with Deutsche Bank shares up 26%, while companies like Siemens Energy and Rheinmetall AG posted significant gains. However, the automotive sector faced challenges, as major manufacturers like Volkswagen, Porsche, and Mercedes-Benz issued profit warnings.
Economic Weakness and Political Instability Persist
Despite the stock market surge, Germany’s economy is still facing difficulties. Manufacturing has been in decline, and the Ifo Business Climate Index fell for the fifth consecutive month in November. GDP growth was only 0.1% in the third quarter, raising concerns about a potential recession.
Political instability also adds to the uncertainty, with the ruling coalition facing potential collapse. A snap election scheduled for February could further shake investor confidence in the country.
