German DAX 40 hits record high as investors rotate away from tech

German DAX 40 hits record high as investors rotate away from tech

The German DAX 40 has hit a fresh all-time high, highlighting how investors are increasingly looking beyond the technology sector as a sharp selloff in US tech stocks prompts a broader rotation across global equity markets.

The record for Germany’s benchmark index comes against a backdrop of heightened volatility in technology shares, with investors reassessing some of the lofty valuations that have driven much of the recent equity-market rally. The weakness in US technology stocks has raised questions over whether the market’s long-running preference for artificial intelligence and other high-growth areas can continue at the same pace.

Those looking to trade the DAX can do so through spread betting or CFD trading on our trading platform.

Why the DAX is benefitting from the tech sell-off

For the DAX, however, that shift in sentiment is proving supportive. Germany’s benchmark has a very different sector composition from the US indices, with industrial companies and other traditional parts of the economy accounting for a much greater share of the index. As money moves away from the most heavily owned technology stocks, these sectors are providing investors with an alternative way to maintain exposure to equities.

The move to a record high therefore represents more than simply a German market story. It is a sign that the equity rally could be broadening beyond the narrow group of technology companies that have dominated investor attention for much of the past few years.

The DAX’s strength is particularly notable because Germany’s stock market is closely associated with its industrial sector. Companies exposed to manufacturing, engineering, autos, chemicals and other cyclical areas can benefit when investors become more optimistic about the prospects for the broader economy and begin looking for value outside the technology sector.

Is this the end of the technology trade?

That does not necessarily mean investors have abandoned the technology trade. The sector remains one of the most important drivers of global equity markets, while the structural investment case surrounding artificial intelligence and digital infrastructure remains intact. A period of profit-taking or valuation adjustment does not automatically signal the end of the broader technology bull market.

Instead, the DAX’s record high could indicate that investors are becoming more selective about where they deploy capital.

This distinction is important. A healthy bull market does not necessarily require every sector to rise at the same pace. In fact, sustained gains tend to become more durable when participation broadens and capital starts flowing into areas that have previously lagged behind.

The current rotation could therefore be viewed as constructive for equities more broadly. If investors are simply selling technology shares and moving into other sectors, rather than abandoning equities altogether, the underlying appetite for risk remains intact. That could help extend the wider stock-market rally even if the technology sector enters a period of consolidation.

The valuation case for European industrials

There is also a valuation argument behind the move. After the powerful gains enjoyed by major US technology companies, investors may increasingly be looking for markets and sectors where expectations are less demanding. Germany’s industrial-heavy DAX provides exposure to a different collection of companies and economic themes, potentially making it attractive when investors become less willing to pay a premium for already highly valued technology stocks.

For those wanting to understand more about what trading is and how sector rotation works across global equity markets, our resources on trading for beginners and online trading cover the key concepts in accessible detail.

Technical analysis of the DAX 40

The DAX 40, up over 1% on Thursday the 12 of November and close to 10% year-to-date, has hit a new all-time high at 26,998. This level, being close to minor psychological resistance at 27,000, may cap the upside for now with a gradual retracement towards the 5 November high at 26,693 perhaps being on the cards.

DAX 40 daily candlestick chart

More support sits between the August highs at 26,618-to-26,573.

Above the 27,000 mark lies the 100% extension of the October 2023-to-March 2025 high, projected higher from the April 2025 low, which comes in at 27,366 and represents the next upside target.

Further up the 161.8% Fibonacci extension of the August 2024-to-March 2025 advance, projected higher from the April 2025 low, comes in at 28,928. It represents another possible upside target. 

Can the DAX sustain its record run?

The key question now is whether the DAX can sustain its record-breaking run.

A continued rotation into industrials and other traditional sectors would suggest that the market is broadening rather than simply losing momentum. Conversely, if technology stocks stabilise and regain leadership, the recent strength of the DAX could prove to have been a temporary beneficiary of the selloff elsewhere.

For now, though, the message from Germany is clear: there is life beyond the tech trade. The DAX’s record high shows that investors are willing to look elsewhere for returns, and that could be exactly what the broader equity bull market needs to keep going.

How to trade the DAX 40

1. Do your research on the DAX 40, the sector rotation theme and the macro data releases most likely to influence the index in the near term
2. Decide whether you want to trade via spread betting or CFD trading 
3. Open a trading account with us
4. Search for the DAX 40 in our trading platform
5. Place your trade