Stock index DAX sets new records in current trading session

Torrid Tuesday? The DAX index inching towards an unprecedented 20,000-point milestone. Let's chew the fat behind this and figure out what's cooking now.

Here we are, kickstarting the week with the DAX sprinting past 1.3% and peaking at 19,876 points, almost touching the holy grail of 20,000. As for its European brethren, the Euro Stoxx 50 rejoiced, surging 0.7% to 4,835 points. This euphoria was fueled by robust economic data emerging from China, baby.

Given the recent noticeable decline in inflation, investors have started placing their wagers that central banks will keep slashing interest rates to inject a jolt of life into the languishing economy, especially Germany. His Majesty, Jens-Oliver Niklasch of Landesbank Baden-Württemberg, prophesied that the European Central Bank (ECB) will lower rates again in December, and he's not alone in this foresight. A further dollop of easy money from the US Federal Reserve is also on the cards.

It's turnabout, dear Watson, as the anticipated yuletide stock rally is pancing about in full vigor. Just a couple of weeks ago, the DAX had plummeted to its lowest since late September, but since then, it's fought its way up by a whopping 6%. The journey so far for 2024 stands at nearly 19% in gains.

DAX (WKN: 846900) ## What does the future hold for the DAX? Munich RE, Adidas, and BMW stocks leading the way

This remarkable annual performance might be alluring enough for more traders to jump on the bandwagon, as not a soul desires missing out on a runaway train. "Glancing at it, it looks like it could now head into an end-of-year rally," noted Martin Utschneider of Finanzethos before the day's trading began.

At present, the stocks of Munich RE and Adidas are blazing a trail for the DAX with a gain of nearly three percent, closely tailed by automaker BMW with a 2.7% surge. There's nary a loser in sight in the German benchmark index, mate.

With some tidbits from dpa-afx

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Breaking down the DAX's recent run-up and the current moxie

You might have noticed that the DAX has flirted with new highs, uplifted by a stellar German factory order volume and pro-growth policies unveiled by the German government. These financial kisses have aptly elevated investor enthusiasm amid lingering trade friction and geopolitical vagaries.
If you've followed the news, German economic cheer has eroded away the layers of gloom that enveloped it since—drumroll, please—2022. The ZEW indicator shows a significant bounce in optimism fueled by expansion in investments and consumer demand. The tide of optimism improves further owing to pro-growth fiscal measures and recent ECB interest rate reductions, which might help Germany emerge from nearly three years of doldrums.
Seems like Europe's got a bright future ahead, thanks to surging investor sentiment that expects stronger European growth and rallying equities for the upcoming year, thanks to Germany's fiscal stimulus and the ECB's easing of monetary policies.

The ECB and interest rate forecasts

Of course, the ECB is rumored to slice interest rates again by 25 basis points, given its eighth decrease in the refinancing rate over the past year. This nice, soft landing is expected to juice up the economy in the eurozone and keeps the DAX's engine running beautifully.
While recent factory orders and PMI data have been quite alluring, the ECB can't avoid bumping into the barbwire of potential reimposition of reciprocal tariffs. If they crop up, such trade restrictions might dampen trade and eventually economic growth.

Forecasting the DAX's destination

For June 2025, predictions pinpoint the DAX kicking off at around 23,843 points and closing at 24,423, with a plausible peak of 26,133 and a swoon to 22,713. This translates to minimal gains of approximately 0.7% to 1%.
July 2025 might witness even more modest increases, with forecasts estimating that the DAX will close at June's high of 23,619 to 23,149, a tidy growth of about 0.6% from the previous month's closure.
As we journey into the upcoming sunlit months, the predicted monthly increases maintain their meek pace, signaling a measured growth that's mildly encouraging but bears multiple caveats.
By mid-2026, a forecasted correction with slight declines is foreseen, possibly due to changing economic conditions or the current easing cycle reaching its tethering point.

Investors might be enticed to delve into the stock-market, with the DAX index, presaging a potential end-of-year rally, considering its recent surge and nearly 19% gains in 2024. Furthermore, engaging in financing opportunities such as investing in Munich RE, Adidas, and BMW stocks could be rewarding, as these stocks are currently leading the way for the DAX.