Why the DAX 40 is hitting record highs despite Germany's stagnation
Germany's DAX 40 index has surpassed 24,500 points despite the nation's ongoing growth concerns, driven by global revenues, sectoral strengths, and fiscal policy optimism.
Global revenue streams insulate German companies
Germany's DAX 40 index has reached unprecedented levels, surpassing 24,500 points on the 9th of July 2025, despite the nation's ongoing economic woes with the German Bundesbank anticipating stagnation for the entire year of 2025.
A significant factor contributing to the DAX 40's resilience is the global orientation of its constituent companies, with approximately 80% of their revenues generated outside Germany.
This international diversification, with substantial exposure to markets in the United States, China, and the broader eurozone, insulates these firms from domestic economic challenges.
Trading platform users should note that this global revenue stream allows German companies to capitalise on growth opportunities abroad.
Sectoral strengths driving index performance
While traditional sectors like automotive manufacturing face headwinds, other industries within the DAX 40 have demonstrated robust growth.
Technology leader SAP has experienced significant gains, bolstered by advancements in AI-driven solutions.
Defence company Rheinmetall's stock surged by over 200% year-to-date in 2025, reflecting increased defence spending and geopolitical tensions.
DAX 40 comparison chart
Share trading investors have benefited from strong performances in the financial sector, with Commerzbank's stock rising over 90% amid consolidation prospects.
These sectoral successes have offset weaknesses in other areas, contributing to the overall ascent of the DAX 40 by over 22%.
Fiscal policy shifts boost investor confidence
The German government's approval of a substantial €1 trillion spending plan targeting infrastructure and defence has bolstered investor confidence.
This fiscal stimulus aims to rejuvenate the economy and modernise critical sectors, signalling a departure from previous austerity measures.
The anticipated economic revitalisation has positively influenced market sentiment, with investors viewing the spending plan as a catalyst for future growth.
Online trading participants should monitor how this fiscal expansion impacts individual DAX companies and sectors.
Monetary policy easing expectations support equities
Expectations of one 25 basis point interest rate cut by the European Central Bank (ECB), amid declining inflation, have further buoyed equity markets.
Lower borrowing costs enhance corporate profitability and make equities more attractive relative to fixed-income investments.
This monetary policy outlook provides additional support to stock valuations across the DAX 40.
Index trading opportunities may emerge as investors position for continued ECB accommodation.
Valuation considerations and market dynamics
Despite the DAX 40's impressive gains, valuations remain relatively moderate, with the index trading at approximately 13.9 times forward earnings.
This valuation level is lower than the S&P 500's price-to-earnings (P/E) ratio of around 19.5 and also lower than that of some European counterparts such as the French French CAC 40's P/E of close to 19 and the Netherland’s 16.7. This suggests that investors perceive continued growth potential without excessive overvaluation concerns.
However, potential risks, including geopolitical tensions and global economic shifts, warrant cautious optimism among investors.
DAX 40 technical analysis
On the 9th of July 2025, the DAX 40 rallied above its early June previous record high at 24,479 and breached the 24,500 mark whilst aiming for the 24,900 mark.
Monthly DAX 40 candlestick chart
The 161.8% Fibonacci extension of the 2020-to-2022 bull market, projected higher from the September 2022 low, at 24,900 represents the next technical upside target. Since it’s a round number, further up beckons the psychological 25,000 region.
Daily DAX 40 candlestick chart
How to trade the DAX 40:
- Research the German economy and constituent companies' global exposure
- Choose whether you want to trade or invest
- Open an account with us
- Search for DAX 40 in our platform or app
- Place your trade
Remember that index trading carries risk, and past performance doesn't guarantee future results. Consider your investment goals and risk tolerance before trading.
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