Euphoria on the German Stock Market: DAX Hits All-Time High after Trade Agreement between USA and UK
Stock price of Dax soars to new peak following Trump market downturn
The DAX experienced an impressive surge in the initial trading hour, soaring by 0.7 percent to reach a staggering 23,529 points, smashing its previous record of 23,476 points. This optimistic climb followed a month of turmoil after the crash caused by Donald Trump's tariffs.
The trade agreement between the USA and the UK played a significant role in igniting this bullish sentiment, with stock exchanges closing daily in the green. On Thursday, the German leading index ended 1 percent higher at 23,353 points. US stock markets also responded favorably to this trade agreement, albeit more temperately.
Thomas Altmann, a portfolio manager at QC Partners, however, cautioned that while optimism abounds, the starting position for this deal was easier as the UK already boasted a surplus in trade with the USA, necessitating fewer concessions.
Hot Spots:
- Commerzbank: The Frankfurt-based bank reported a net profit of €834 million in Q1, an increase of 11.7 percent, to the delight of investors. Smaller companies like Krones and Bechtle are also in focus.
- Exports: China recorded a surprising 8.1 percent increase year-on-year in exports and a mere 0.2 percent decline in imports in April, defying expectations of a more substantial trade downturn, especially due to the ongoing trade conflict with the USA.
Insights from Behind the Scenes
- The improved trade relations and political stability resulting from the UK trade agreement have fuelled increased investor confidence in the stability of Germany's trade environment. The ZEW Economic Sentiment Index, which measures economic expectations, surged to 25.2 in May 2025 from a forecast of 11.9, reflecting this optimism about political and trade stability.
- The clear trade framework with the UK reduces tariff and non-tariff barriers, aiding the German economy's export-heavy sectors like automotive and chemicals. This enables smoother supply chains, benefiting companies enjoying trade with the UK.
- The broader environment of easing global trade tensions, particularly between the US and China, has also positively influenced investor sentiment worldwide, complementing the benefits of the UK-Germany trade progress.
- Alongside trade developments, Germany's domestic economic indicators – including economic sentiment and corporate earnings – have exceeded expectation, contributing to the DAX's upward momentum.
Source: ntv.de, chl/DJ/rts/dpa
- DAX
- Trade Agreements
- German Economy
- Stock Prices
A History of Trade Tensions and the DAX
Prior tariffs introduced by former US President Trump stirred worries about inflation and economic growth globally. However, the reduction of some trade uncertainties and the establishment of clearer trade rules with partners like the UK have helped lessen these concerns, bolstering market confidence. This shifts in trade sentiment work in concert with the benefits arising from the UK-Germany trade agreement to support stock prices in the DAX.
The optimistic climb of the DAX, reaching an all-time high of 23,529 points, can be attributed to the significant role that the trade agreement between the USA and the UK played in igniting a bullish sentiment on the German Stock Market. This agreement, along with the easing global trade tensions, particularly between the US and China, has positively influenced the investment decisions made within various industries, including finance and business, thereby impacting employment policies and community policies within companies that are heavily reliant on exports, such as automotive and chemicals.
