German Bank set for price increase
The German stock market is experiencing a surge of optimism following the announcement of a new trade agreement between the United States and the European Union. The deal, unveiled on July 27-28, 2025, aims to lower US tariffs on European products to 15%, providing greater stability and predictability for businesses on both sides of the Atlantic.
One of the key beneficiaries of this agreement could be the German DAX index. The reduced tariffs on European goods, including German exports, are expected to increase trade flow, enhancing the competitiveness of German and European exporters in the US market. This could improve corporate earnings expectations for companies listed on the DAX, many of which are export-driven.
Moreover, the inflow of EU investments and exports of US energy could strengthen transatlantic economic ties, boosting market confidence and potentially driving upward momentum in stock valuations. By preventing tariff escalation, the deal also reduces uncertainty and risk premiums in equity markets, supporting stability in indices like the DAX that are sensitive to global trade conditions.
The DAX index has already shown signs of improvement, with the German leading index gaining for the second consecutive trading day. By the end of the day, the Dax stock market barometer improved by 0.2% to 24,296 points, and the Dax all-time high of 24,639 points is now within reach.
Deutsche Telekom, a German telecommunications company, experienced a significant increase due to strong performance from its US subsidiary T-Mobile. T-Mobile attracted a high number of new customers in the second quarter and raised its annual targets, contributing to the rise in Deutsche Telekom's stock. The US bank J.P. Morgan described T-Mobile's results as "impressive."
On the other hand, some companies have faced challenges. Atoss Software's stock fell after weak results, while Amadeus Fire, a personnel service provider, reduced its business targets, causing a drop in its share prices. STMicroelectronics, a chipmaker based in Paris, experienced a significant drop in share prices due to write-offs and restructuring costs.
Despite these setbacks, investors seem to be warming up to this idea. Jürgen Molnar, a capital market strategist from broker RoboMarkets, commented that Deutsche Bank is back on track to success, with the bank's stock climbing to its highest level in ten years, up over 8% at the Dax top. Deutsche Bank is also expected to achieve more profits this year after a significant increase in quarterly earnings.
In the MDax, DWS, a fund company and Deutsche Bank subsidiary, raised more money from investors, indicating a positive sentiment towards the financial sector. However, the full details of the trade agreement have not yet been released, so precise sectoral impacts and longer-term effects will depend on subsequent negotiations and implementation.
In conclusion, the new US-EU trade agreement is a significant step towards easing tariff tensions and promoting transatlantic commerce. While there are still uncertainties, the overall outlook is positive for the German stock market, particularly for export-driven companies and those with strong US operations.
The promising outlook of the US-EU trade agreement could incentivize more investors to finance and invest in German companies, especially export-driven ones with strong US operations, due to the increased stability and predictability in the US market. This potential investment surge could further boost the growth of the German DAX index.
The improved market sentiment towards the German economy, coupled with the strengthening of transatlantic economic ties, is likely to drive upward momentum in the stock valuations of companies listed on the DAX, potentially reaching new all-time highs.
