DAX continues to set fresh highs

The DAX has now spent a fourth day trading above the 9000 level.

The German economy has looked a little wobbly over the last quarter, with the economic data far from convincing. That being said, markets have been categorically bullish and the DAX is now some 1300 points higher than at the start of the year – not bad for an economy that has borne the brunt of analysts’ expectations in terms of dragging the rest of the EU out of recession.

Germany has been better placed than most to benefit from the current situation. It’s an economy that has a backbone of manufacturing and export has benefited from its currency being dragged lower due to the weight of negativity surrounding some of the other EU members.

Today’s figures from Volkswagen highlight this beautifully, after third-quarter profit increased by almost 20% from €2.32 billion, up to €2.78 billion. Unsurprisingly, this improvement in the company’s operating profit was driven by sales of its luxury brands Audi and Porsche to south-east Asia and specifically China. Not only is there a healthy appetite for premium goods, but the advantage of the products being manufactured in a euro-denominated country, has helped the spending power of Asian customers.

So are we about to see the DAX top out? Well, as long as the strength of both the US and Chinese economies continue to hold, Germany's leading index should be able to handle the weakness of its European neighbours.

Germany 30 (DFB) chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.