Record High for Dax30 as It Heads for 9,000 on FED Rate Cut Hopes

The German Dax index has rallied 20% since early November and around 12% since the beginning of 2024. The Eurozone and particularly the German economy have been showing weakness, however, this has been helping the rally in European stock markets with the idea that the ECB interest rates will start to go down soon, which will divert investments from bonds to stocks.

DAX30 Daily Chart – Bouncing Off the 20 SMA

However, the positive news from the European economies is also welcomed news for stock markets, so it seems like we are in a win-win situation in the equity market. The positive revisions in the German and Eurozone PMI had somewhat of an impact, but the surge yesterday was on the back of softer comments from Jerome Powell who confirmed once again that rate cuts are coming, during his testimony at the US congress.

Yesterday European stocks, including Germany’s DAX30 index, experienced gains, with market sentiment remaining positive ahead of the second day of Federal Reserve Chair Jerome Powell’s testimony. In the US, the technology sector led the gains, with the Nasdaq Composite index (^IXIC) rising by as much as 1.7%. Meanwhile, the broader S&P 500 index increased by just over 1%, reaching a record closing high of 5,157.34.

Tech Companies Share Regain Momentum

The strong performance in the technology sector contributed to the overall positive sentiment in the markets, reflecting investors’ confidence in the growth prospects of tech companies. Additionally, Powell’s testimony likely provided further clarity on the Federal Reserve’s monetary policy stance, which may have bolstered investor confidence. Overall, the upbeat mood in both European and US markets suggests optimism regarding economic recovery and corporate earnings prospects, despite lingering concerns about inflation and monetary policy adjustments

Bayer recouped its losses from Tuesday, earning a 4% gain on Wednesday, but yesterday it resumed the decline again, however it didn’t affect the Dax indexwhich continued to surge yesterday. This climb was aided by growing speculation of a probable Federal Reserve rate drop in the first half of 2024, which boosted investor sentiment toward technology equities.

As a result, shares of Infineon Technologies and SAP increased by 2.02% and 1.04%, respectively. These increases helped to drive the German DAX index’s overall favourable performance. Market analysts believe that if the DAX index can break over the previous all-time high of 17,900 points established on Friday, it might pave the door for further rises towards the 18,000 mark. Such a breakthrough is likely to pique investor interest and sustain further upward momentum in the index.