Corporate German Stocks Rise in Anticipation of Potential Trump Deals, According to Dax's Recent Statements
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The Dax, Germany's renowned benchmark index, soared to a historic high at the start of trading on Friday, reaching almost 23,519 points. This upward momentum began in April 2022, following the first tariff shock, and the index has been steadily climbing ever since, gaining around 27% during its impressive recovery. It is up a staggering 18% year-to-date.
In contrast, the Eurozone index, EuroStoxx 50, is still slightly below its record high, set in March. It gained 0.4% on Friday, while the MDax, representing medium-sized German companies, rose 0.27% to 29,635 points, and it's still working its way towards its record high from 2021.
Arms Boom Boosts Rheinmetall to Record Sales
In the first quarter of 2025, defense giant Rheinmetall more than doubled its net profit, reaching a massive 108 million euros. The company's success can be attributed to the ongoing arms race, with CEO Armin Papperger stating, "We have to and will deliver. We are experiencing growth like never before in the company and are coming closer to our goal of becoming a global defense champion." At the end of April, the company reported a 46% increase in sales to 2.3 billion euros, with the military business driving a significant portion of this success.
For the full year, Rheinmetall is ambitiously targeting a 25-30% increase in overall sales and a 35-40% surge in the military segment. The operating margin is also expected to rise slightly to around 15.5%. This upward trend in the arms industry is mainly driven by geopolitical factors, such as Russia's attack on Ukraine, and strengthened by US President Donald Trump's security policy, which calls for higher defense spending within NATO.
Strong Quarterly Reports Fuel Dax's Climb
The positive trend on the stock market is fueled by optimism about US President Donald Trump ultimately living up to his reputation as a deal-maker. Following his reported first agreement with the UK, some signs of relaxation were observed in conversations between the new German Chancellor Friedrich Merz (CDU) and US President Trump.
A Glimpse into Other Market Movers
Rheinmetall's milestone earnings report is just one of many positive stories driving the stock market. Fund company DWS increased its quarterly profit by an impressive 37% to 199 million euros, while Italian bank Unicredit was granted approval to acquire up to 29.99% of Commerzbank without conditions. This decision has been met with mixed reactions, with critics fearing potential restrictions in credit provision after a potential merger.
The trade conflict between the US and China continues to stir up market volatility, with US tariffs causing stocks to plummet in late April 2025. Although President Trump has postponed mutual tariffs for 90 days, high tariffs on Chinese goods remain in place, putting pressure on market confidence.
In a positive turn of events, US President Trump unexpectedly suspended most of his tariffs on Wednesday evening, resulting in a 8.2% jump for the Dax at the start of Thursday, with the index trading at 21,291.15 points. Meanwhile, the rally on the stock market is anticipated to continue, with the GfK consumer climate index for May showing an improvement in German consumer sentiment, despite a somber outlook.
Market observers remain cautious, though, with Jeremy Siegel viewing the escalation of tariffs as a lasting risk. The recovery from April 2025 seems to have been short-lived, according to Siegel.
- As the Dax index in Germany reached a historic high, one might wonder if the same trend is apparent in the Eurozone index, given the steady growth of the Dax since April 2022.
- Amidst the positive numbers in the business and finance world, technology companies are not to be left behind, as evidenced by Rheinmetall's Record Sales, surpassing 2.3 billion euros in Q1 of 2025, driven by the ongoing arms race.
- With President Trump's first agreement with the UK emerging, there's an air of optimism about the stock market, which could potentially strengthen the average investor's faith in the general news sector.
- In the realm of education-and-self-development, market watchers like Jeremy Siegel caution investors about the escalating trade tensions, pointing to the potential long-term risks they pose to the overall market performance.
- As US President Trump suspended most of his tariffs, sports fans and stock market enthusiasts alike witnessed an 8.2% jump in the Dax index, with the index trading at 21,291.15 points, raising questions about whether this rally in sports and business will continue in the coming weeks.
