FRANKFURT, Germany (CHATNEWSTV) — Germany’s DAX stock index broke through the 20,000-point mark for the first time on Tuesday, riding a wave of investor optimism despite a sluggish domestic economy.
The index, which has climbed roughly 3,000 points in 2024 alone, briefly surpassed the milestone in morning trading before settling slightly below 20,000 later in the day.
Investor hopes for further interest rate cuts in the eurozone and the United States have fueled the surge. The recent decline in inflation has strengthened expectations that central banks, including the European Central Bank (ECB) and the U.S. Federal Reserve, will reduce rates to stimulate growth.
“Falling interest rates make stocks more attractive compared to bonds,” said market analyst Klaus Müller of Frankfurt Securities.
“Companies can borrow more cheaply, boosting their capacity for investment.”
Stocks Up, Economy Down
The DAX’s record-breaking performance contrasts sharply with Germany’s faltering economy, which has stagnated or contracted over the past three years. However, many of the blue-chip companies listed on the index derive substantial revenue from international markets, lessening their dependence on the domestic economy.
“Investors are forward-looking,” Müller added.
“They’re banking on future profits rather than today’s economic data.”
Solid economic reports from China have also bolstered German equities, while political turmoil in France may have prompted some investors to shift their focus to Germany.
A Trump Effect?
The recent election of Donald Trump as the next U.S. president has further buoyed financial markets, particularly in the United States, with ripple effects reaching Germany.
“Trump’s promises of tax cuts and deregulation are creating a bullish mood in global markets,” said economist Anna Keller. “For German firms with significant U.S. operations, there could be a direct benefit.”
Year-End Rally in Play
The DAX has gained 19% in 2024, a strong performance likely to attract additional buyers as the year-end rally—a common phenomenon on the stock market—continues.
“The 20,000-point mark is both psychological and symbolic,” Keller said.
“It signals confidence in equities, even as the economy faces challenges.”
