Germany’s DAX index reached a record high of nearly 20,462 points before declining to 20,330 points. It has seen a 22 percent rise this year, outperforming many global indices. Key market movements include a strengthening euro, rising oil prices due to Middle Eastern political shifts, and defense stocks facing declines. Meanwhile, CompuGroup shares surged after a takeover bid, Volkswagen initiated a warning strike, and Stabilus cut its dividend following profit losses. A class action lawsuit against Meta is also underway for a significant data breach.
German Leading Index Hits New Heights
The DAX, Germany’s premier stock index, has once again achieved a remarkable milestone, marking a record high. With an impressive growth of nearly 22 percent this year, the DAX has outperformed the Dow Jones—yet this comparison may not tell the whole story.
As the new trading week commenced, the DAX surged to an all-time high of almost 20,462 points at the outset. However, the momentum quickly waned, leading to a decline as the index slipped into negative territory. By midday, the DAX settled at 20,330 points, reflecting a decrease of 0.3 percent.
Understanding DAX’s Performance Metrics
Despite this midday dip, the DAX’s annual performance remains impressive. Since the beginning of the year, it has recorded a robust increase of nearly 22 percent, surpassing many global indices. However, it’s essential to clarify a critical distinction: the DAX is categorized as a performance index. Unlike pure price indices such as the Dow Jones, FTSE 100, CAC40, or Nikkei, which only consider the price movements of stocks, the DAX also factors in dividend payments from its constituent companies.
For a more accurate comparison, investors should consider the DAX price index, which has also reached a new high, gaining 18.1 percent since the end of 2023. This positions it closely alongside the Dow Jones, which has seen an increase of 18.8 percent this year. In contrast, the tech-heavy Nasdaq 100 index has excelled, boasting a significant price gain of 28.5 percent.
Looking ahead, the Nasdaq 100 is poised for a potential downturn, with futures currently down by 0.1 percent. Meanwhile, futures for the Dow Jones and the broader S&P 500 appear to be stabilizing.
In currency markets, the euro has strengthened by 0.2 percent, trading at 1.0584 dollars. Gold prices have also rebounded from early losses, with an ounce now priced at 2,656 dollars, reflecting an increase of 0.6 percent.
In the oil market, prices are climbing in response to political shifts in Syria, particularly following the fall of Bashar Al-Assad. Brent crude has risen by 0.9 percent, reaching 71.57 dollars per barrel, as analysts cite heightened political uncertainty in the Middle East.
On the other hand, defense stocks are experiencing pressure as investors take profits. In the DAX, Rheinmetall shares have plummeted over three percent, while Hensoldt in the MDAX has seen a decline of more than four percent. Renk in the SDAX has faced an even steeper drop of over six percent, attributed to recent geopolitical events.
In a different market development, CompuGroup shares have surged nearly 31 percent to 21.52 euros following a takeover offer from financial investor CVC, which proposes 22 euros per share—an impressive 51 percent premium over the average share price of the past three months.
In labor news, Volkswagen has commenced a second warning strike at its main plant in Wolfsburg, affecting production for four hours. This strike is part of ongoing wage negotiations and has implications for several other facilities across Germany.
Additionally, industrial supplier Stabilus announced a reduction in its dividend after a decline in profits, cutting the payout from 1.75 euros to 1.15 euros per share for the 2023/24 fiscal year.
Lastly, individuals affected by a significant data breach at Facebook can soon join a class action lawsuit against Meta, providing a relatively straightforward avenue for seeking compensation, as announced by the Federal Association of Consumer Organizations in Berlin.