FRANKFURT (AFP) – Germany’s blue-chip DAX stock index jumped above 20,000 points for the first time yesterday following gains on United States (US) and Asian markets, defying multiple headwinds battering Europe’s biggest economy.
The index, which groups the 40 largest publicly-traded companies on the Frankfurt Stock Exchange, reached 20,022 points at around 0900 GMT before slightly paring its gains.
The German economy, hit hard by a manufacturing slowdown and weak demand for its exports, has been struggling in 2024 and is on course to contract for a second straight year.
Adding to the challenges are heightened political uncertainty as the country heads for new elections in February following the collapse of the government, and the threat of new US tariffs under US President-elect Donald Trump.
But the DAX has nevertheless surged ahead, rising more than 19 per cent since the start of the year.
This is in part because the groups in the index are not domestically focused, with “84 per cent of the turnover of DAX companies generated abroad”, Head of Investment Strategy at Deutsche Bank Ulrich Stephan said recently.
Recent falls in the euro have also boosted Germany’s export-oriented companies, analysts have noted.
Some key examples of German firms with big overseas footprints are Deutsche Telekom, whose US subsidiary T-Mobile operates the largest 5G network in the US, insurer Allianz and software giant SAP.
German markets have thus been boosted by the same forces that have seen Wall Street stocks hitting fresh records since Trump’s election win, with investors cheering his promised tax cuts and deregulation.
