"The current week at DAX is packed with exhilaration"
In the heart of Europe, the German stock market, specifically the DAX, is experiencing a whirlwind of changes due to the ongoing US election and President Donald Trump's trade policies. The evolving trade relations and political climate between the US and EU are having a significant impact on transatlantic economic ties, causing the DAX to exhibit volatility.
Following the recent developments in US-EU trade talks and the new tariff deal agreed under President Trump, the DAX has seen a drop of over 1% after initial optimism about the agreement faded. European investors' concerns that the deal favours the US side, particularly with the EU accepting a 15% tariff on most exports to the US, have dampened market confidence on the German stock market despite simultaneous gains in US equities reaching record highs.
Three stocks that are particularly significant during this period are Porsche, Siemens Energy, and Rheinmetall.
Porsche, a major player in the automotive sector, is sensitive to tariff changes due to their direct impact on export costs and competitive positioning in the US market, a significant sales destination for luxury European cars.
Siemens Energy, a key player in Germany's industrial exports, is affected by tariffs and broader trade tensions shaping investor expectations. Energy infrastructure and equipment exports can be impacted by tariff structures, and Siemens Energy’s significance also comes from Germany's broader strategic response to geopolitical shifts, including increased defense spending and energy security concerns amid Russian aggression.
Rheinmetall, a defense contractor, gains prominence due to Germany's planned increase in defense spending to €162 billion by 2029, raising defense expenditure to 3.5% of GDP ahead of NATO targets. This spending boost, spurred by the geopolitical context linked to US and Russian relations, benefits defense contractors like Rheinmetall.
Despite the excitement surrounding the US election and its potential impact on the DAX, Wall Street's favour towards a potential second term for President Trump does not seem to be affecting Siemens Energy's performance. On the contrary, since the beginning of the year, the price of Siemens Energy's shares has more than tripled.
Investors are currently focusing on Siemens Energy among individual stocks in the DAX, with no significant price movements expected in the DAX today, except for Siemens Energy. On this Thursday (7. November), no major financial releases are expected from Siemens Energy. However, on the same day, Rheinmetall will publish its figures for the third quarter.
Market strategist Jürgen Molnar from the trading house Robomarkets considers this week to be the most exciting on the stock exchange this year, though his excitement does not appear to be influenced by Siemens Energy's performance. The German benchmark index, the DAX, currently stands at 19,192 points, down 0.3 percent, and the European equivalent, the Euro Stoxx 50, is also down 0.3 percent and stands at 4,865 points.
The question of who will move into the White House is still captivating and electrifying investors, with hopes in Frankfurt pinned on the Democrat Harris. Despite the uncertainty surrounding the election, the stocks of Rheinmetall remain at the bottom of the DAX with a loss of 2.8 percent.
[1] Source: Bloomberg [2] Source: Reuters
- The volatility in the German stock market, as exemplified by the DAX, is influenced not only by the ongoing US election and Trump's trade policies but also by the performance of individual companies like Siemens Energy, Porsche, and Rheinmetall, which are significantly impacted by trade agreements, tariffs, and geopolitical shifts.
- The increasing focus on individual stocks in the DAX, such as Siemens Energy and Rheinmetall, indicates that technology, business, and finance sectors are crucial in understanding the current state of the European stock market, as these companies' performances are affected by factors ranging from tariffs to geopolitical events.
