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[FRANKFURT] Germany’s DAX Index became the first major European gauge to surpass its March record high, recouping all declines sparked by US President Donald Trump’s trade war.
The stock index rose as much as 0.8 per cent to a level of 23,528.88, exceeding the intraday peak set on March 18. The pan-European Stoxx 600 Index gained 0.4 per cent by 9.10 am in London as US-China trade talks due this weekend buoyed sentiment.
The DAX had previously slumped as much as 16 per cent as Trump’s sweeping tariffs unleashed global market volatility. But the index has bounced as Washington took a softer tone on trade. Optimism around a German economic boom following the new government’s fiscal reforms has also driven demand for local stocks.
“It needs to be said that the latest economic data, particularly in Germany, have been very favourable,” said Claudia Panseri, chief investment officer for France at UBS Wealth Management. “This good news is coming in as the European Central Bank is giving signals it could lower rates a bit more than what investors expected.”
The German index has become so popular that it’s now relatively expensive, trading at the highest premium against its European peers since 2009.
European stocks more widely have been in favour in 2025 as an improving economic outlook attracted investors looking for alternatives to US assets amid Trump’s tariffs. The Stoxx 600 has so far outperformed the S&P 500 by a record 19 percentage points in dollar terms.
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While the European benchmark’s price-to-earnings ratio of 14 is now slightly higher than its 20-year average, it’s still far cheaper than the S&P 500’s ratio of nearly 21, according to data compiled by Bloomberg.
About US$4.2 billion flowed into European stock funds in the week through May 7, according to a note from Bank of America citing EPFR Global data. BofA strategist Michael Hartnett has said he prefers international equities over the US this year.
Among individual movers, Commerzbank rose 2.4 per cent after first-quarter profit unexpectedly rose as the German lender set aside less money than expected for souring loans amid the trade war.
“The banking sector has clearly been spearheading the European rally these past weeks along with industrials and real estate, these are solid drivers, notably for Germany,” Panseri at UBS Wealth Management said. BLOOMBERG
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