Germany’s stock market is thriving, with the DAX hitting a new all-time high for the second consecutive day on Monday. The index rose 1.57%, nearing 20,000, driven by strong performances in the technology, financial, and industrial sectors, even as broader economic concerns persist.
The DAX has surged 19% year-to-date, making it the best performer among European markets, while the Pan-European STOXX index rose just 7%. In comparison, the S&P 500 and China’s A50 gained 27% and 15%, respectively.
Key Drivers of the Rally
The DAX’s strong performance is fueled by global trends and sector-specific growth. The technology sector, particularly SAP, has seen impressive gains, with shares up 65% this year. SAP’s focus on artificial intelligence has boosted its market value, making it Europe’s largest tech company.
The financial and industrial sectors have also contributed, with Deutsche Bank’s shares rising 26% thanks to higher interest rates, and companies like Siemens Energy and Rheinmetall AG seeing share price increases of 328% and 117%, respectively. However, Germany’s automotive sector has faced struggles, with carmakers like Volkswagen, Porsche, and Mercedes-Benz issuing profit warnings.
Economic and Political Struggles
Despite the stock market’s success, Germany’s economy is facing challenges. Manufacturing activity remains in contraction, and the Ifo Business Climate Index dropped for the fifth straight month in November. GDP grew only 0.1% in Q3, with concerns of a potential recession.
Political instability adds to the uncertainty, as the ruling coalition risks collapse, with a snap election scheduled for February. This could dampen investor confidence in the country.