DAX breaks 27,000 as European earnings outlook strengthens
The DAX index surpassed 27,000 points for the first time, outperforming the S&P 500. Strong earnings from German industrial giants are positioning the market as a hedge against AI volatility.
The DAX index rose 3.6% for the week, surpassing the 27,000-point mark for the first time and setting a new all-time high. This performance was double that of the S&P 500, driven by strong corporate earnings and raised forecasts from major German companies including Siemens, Münchner Rück, and Allianz. A slight decline in oil prices also contributed to the rally.
Analysts project German corporate profits to grow by 12% next year and another 12% the year after. In contrast, U.S. profit growth is forecast at 13%, but 9 percentage points of that growth are attributed to AI, compared to only 2 percentage points in Germany. This divergence is repositioning the German market as an "anti-AI trade" or a hedge against AI volatility. Investors are increasingly viewing Europe’s lower exposure to the AI sector as a strategic advantage, attracting attention for its resilience in a market dominated by tech-driven fluctuations.