DAX Hits New All-Time High as Monetary Policy Loosening & Global Rally Fuel Momentum
Gemran exports showed a larger than expected decline today but failed to dent investor confidence.
- New all-time high as DAX set to close 3-week winning streak
- ECB’s Villeroy states more cuts to follow in 2025
- Exports decline faster in October than analysts’ expectations
DAX Hits New Record High
The DAX continued to rally to a record this morning, up 0.42%, on the back of declining interest rate outlook and global stock rally. The index is set to close a 3-week winning streak after yesterday’s rate cut from the ECB.
The top performer this morning, helping the DAX achieve a new milestone, is Munich Re up 5.9%, the company projected its FY profit forecast for 2025 at €6 billion, The company cited strong operational performance, and expects revenue to hit €64 billion in 2025.
The markets are still captured by an aggressive ECB policy that may turn the tide of a contracting GDP. Fears of a Trump trade tariff war are also still present, but the hope of a deal, and central bank policy is stronger than the perceived risk.
DAX Live Chart
ECB Policy Shines Despite Poor Economic Data
Yesterday’s interest rate cut was widely anticipated by the market. However, the sentiment for further cuts in 2025 is growing. The central bank left the door open for more cuts in 2025 to prop up a struggling economy.
The ECB removed a reference from its forward guidance to keeping rates restrictive for as long as needed. Many analysts see this as an indication that the central bank will continue to cut rates in 2025.
Adding to this sentiment was the head of the central bank of France Villeroy, an ECB board member. He stated in a radio interview that more rate cuts were likely and that he was happy with the financial market’s perception of monetary policy.
Exports Decline
Exports declined by 2.8% in October, compared to a consensus decline of 2%. The sharp drop in exports delays the timing of a recovery in revenue growth for a number of the DAX companies.
Germany’s largest importer remained the USA, but exports of goods there dropped by 14.2%. While exports to China, which dropped to second place, have declined by 3.8%.
Overall, Germany still has a net trade balance surplus of €13.4 billion, down sharply from last month’s surplus of €16.9 billion. The decline is even more evident when compared to the surplus from October 2023 of €19.9 billion
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