Rise in DAX Momentarily Halts - Potential Consequences That May Unfold
A New Lease of Life for the German Economy
Even though the German economy showed signs of improvement, the stock market took a hit on Wednesday. While companies were more optimistic about the future, they were slightly less satisfied with the current situation.
The Ifo business climate index climbed by 1.6 points to 90.2 points in January compared to the previous month. Although economists anticipated a slight improvement, the actual figure slightly missed the mark, causing the German stock index DAX to temporarily drift to 14,970 points in the morning.
Despite this temporary setback, Jens-Oliver Niklasch from Landesbank Baden-Württemberg views the increase in the business climate as a predictable trend. However, he finds it peculiar that companies report a decline in their current situation, which seems to contradict the improving economic recovery. In his words, "we should not get overly optimistic just because the feared crash hasn't happened."
The German stock market has shown remarkable resilience in 2025, despite mixed economic indicators. For instance, the Dax surged 21% from its April 7 low to almost offset all April losses, fueled by a 90-day suspension of reciprocal U.S. auto tariffs. Furthermore, the Dax has outpaced the S&P 500, rising by 13% in 2025, making it the top-performing major global index.
From a chart perspective, the Dax now remains in a neutral zone, with the index expected to oscillate between around 14,900 and about 15,150 points. If the 14,900 points are undershot in the immediate future, a short-term decline of the Dax to approximately 14,800 points may be imminent. Conversely, if the Dax managed to surpass its 2023 high of 15,269 points, the outlook would brighten again.
Aside from the current economic climate, Porsche AG's price target has been revised by Morgan Stanley, but further details are not publicly available. (With material from dpa-AFX)
On a side note, the Porsche AG stock could see a price jump, as per the latest analysis from Morgan Stanley. However, specifics remain under wraps.
- Despite the improvement in the German economy, shares in Württemberg-based Landesbank Baden-Württemberg may have deteriorated, given the bank's finance director's caution against excessive optimism.
- The fundamentals of the German economy seem to be on an upward trajectory, as evidenced by the increase in the Ifo business climate index, but this optimism hasn't extended to the current situation, as reported by companies.
- Despite the resilience of the German stock market in 2025, such as the Dax surpassing the S&P 500, there's a possibility of a short-term decline in the Dax, if the index undershoots its current neutral zone around 14,900 points – a scenario that might not bode well for shares in Porsche AG, given a recent positive analysis from Morgan Stanley.
