Stock markets are soaring, spurred by President Trump’s pro-business rhetoric, with the DAX hitting a new high of 21,511 points. Despite analyst warnings of an ‘overheated’ market, optimism remains strong, fueled by Trump’s calls for lower oil prices and interest rates. Meanwhile, Asian markets show mixed results, oil prices remain low, and gold nears record levels. Notable developments include Infineon’s stock decline, Monte dei Paschi’s takeover bid, and Boeing’s larger-than-expected losses.
The stock markets are experiencing a surge, driven by the pro-business rhetoric of US President Donald Trump. For the first time, the DAX has crossed the 21,500-point mark, marking its seventh record high in the relatively new stock market year of 2025.
The excitement surrounding Trump’s policies in the stock markets shows no signs of waning. At the World Economic Forum in Davos, the President’s calls for reduced oil prices and interest rate cuts have further fueled market optimism. This morning, the DAX soared to an impressive record high of approximately 21,511 points, achieving its seventh peak just this month.
Is the DAX ‘Overheated’?
Despite increasing warnings from analysts that the DAX may be ‘overheated’ and ‘overbought’, there are currently no indications of profit-taking or corrections. Jörg Scherer, head of technical analysis at HSBC, points out that “the ongoing upward momentum remains strong and has even accelerated recently.”
Jochen Stanzl from CMC Markets observes that the rally appears to be fueled by a genuine short squeeze. Short-term investors attempting to capitalize on falling prices are continuously driven out of the market by the rising tide. “This creates a self-reinforcing cycle, and as prices climb steeper, the market becomes more fragile,” he explains.
Wall Street’s Positive Influence
Optimistic indicators from Wall Street, where Trump’s favorable business stance and robust corporate earnings have provided a boost, continue to support local trading sentiments.
Trump’s Davos Address
In his video address at the World Economic Forum, Trump reiterated his ‘America First’ strategy. He expressed intentions to tackle inflation, cut taxes, alleviate regulations, and promote lower interest rates. Moreover, he urged both domestic and foreign companies to invest in the USA, warning that those who do not manufacture there might face tariffs.
Market participants had anticipated more aggressive measures post-inauguration, leading to a sense of relief in the markets. However, experts caution that the potential implementation of tariffs could spark a global trade conflict, escalate price pressures, and hinder the US Federal Reserve’s easing policies.
Mixed Signals from Asian Markets
As the week concludes, Asian markets displayed a lack of consensus. In China, investors remained hopeful for a trade resolution with the US, resulting in a 0.7 percent increase in the Shanghai stock exchange and a 0.8 percent rise in the index of major companies in Shanghai and Shenzhen.
Oil Prices Under Pressure
Oil prices continue to hover significantly below $80 per barrel this morning, influenced by Trump’s announcement to persuade Saudi Arabia and OPEC to lower oil prices. After experiencing substantial losses the previous day, North Sea Brent crude oil is trading slightly higher at $78.39 per barrel, an increase of 0.1 percent.
Euro’s Recovery Trajectory
Market participants are feeling reassured by the diminishing fears of high tariffs from the US, which could spur inflation and prompt the US Federal Reserve to adopt a more hawkish stance. Trump reiterated at the World Economic Forum the need for the Fed to consider lowering interest rates.
Gold Approaching Record Levels
In the realm of precious metals, gold is on a trajectory toward its record high of $2,790. Currently, the price of an ounce of gold stands at $2,775, reflecting a rise of 0.7 percent.
Infineon Faces Market Pressure
Within the DAX, Infineon shares have emerged as the biggest early trading loser. The semiconductor company is grappling with unfavorable news from the US, where Texas Instruments recently reported disappointing results and forecasted continued weak chip demand alongside rising production costs.
Monte dei Paschi’s Strategic Move
The historic Italian bank, Monte dei Paschi di Siena, has entered the takeover fray in the Italian banking sector, presenting a €13.3 billion bid for competitor Mediobanca. Following its state-backed rescue, Banca Monte dei Paschi is now back in the profit zone.
Rolls Royce Secures Major Defense Contract
The British government has finalized a substantial contract worth £9 billion (approximately €10.67 billion) with Rolls Royce for the development of nuclear submarine reactors. The eight-year agreement encompasses the design, production, and maintenance of these vital power sources for the UK’s submarines.
Boeing’s Unexpected Losses
After the US stock market closed, Boeing disclosed that it anticipates a significantly larger loss than expected. The aerospace giant now predicts a quarterly loss per share of $5.46, attributed to challenges in its defense division and labor strikes, while analysts had initially forecasted a loss of only $1.84.
Tesla Unveils Updated Model Y
Tesla has launched an updated version of its Model Y in the US market, starting at a price of $59,990. Deliveries for this new iteration are set to commence in March.
In a recent statement, Musk expressed skepticism regarding the Stargate project, raising questions about whether his criticism stems from genuine concerns or mere envy.
Nikola Explores Sale Options
Electric truck manufacturer Nikola is reportedly evaluating various options, including selling parts of its operations or possibly the entire company, due to financial difficulties. According to insider reports from Bloomberg, seeking new partners or securing additional financing are also being considered.