Investors are currently in a state of anticipation as Dax experiences a sluggish beginning.
China and Germany's Economies Show Robust Growth
China's economy has reported a significant surge in growth during the first quarter of 2025, with the gross domestic product (GDP) increasing by 5.4 percent compared to the same period last year. This robust recovery is a successful continuation of the country's recovery course, underscoring its strong economic momentum.
According to Thomas Altmann from QC Partners, this growth is a positive sign for China, as it is optimistic about the country reaching its yearly target of five percent growth with the first quarter growth. However, Altmann also noted a decrease in trading volumes the previous day and a growing trend among investors to adopt a "wait and see" approach due to the strong recovery.
Meanwhile, Germany's DAX index, despite a recent slight decline on Wednesday, maintains an overall positive outlook with potential for further gains. The index was calculated at approximately 21,025 points around 9:30 a.m., showing a decline of 1.1 percent compared to the previous day's close.
The growth of China's economy sets a favorable global economic backdrop, potentially benefiting export-driven economies like Germany. The DAX's short-term performance will be influenced by global geopolitical tensions, central bank policies, and economic data releases.
In the past few weeks, the DAX reached fresh record levels, supported by stronger corporate earnings, softer inflation rates, dovish monetary policy expectations, and positive geopolitical developments. Technical analysis suggests a bullish breakout potential for the DAX, with possible gains of 100-150 points initially and up to 400 points on a strong breakout, despite some traders maintaining short positions.
On Wednesday, the DAX experienced a marginal decline to 24,236.85 amid cautious trading before key Federal Reserve signals and mixed sector performance. However, economic data for Germany remains positive, showing growth in the private sector and manufacturing output in August.
In China, industrial production also increased in March, further supporting the country's economic growth. The top performing shares in Germany were Sartorius, Eon, and RWE, while Brenntag, Siemens Energy, and Infineon were at the bottom.
The exchange rate on Wednesday morning was one dollar traded for 0.8787 euros and one euro cost 1.1381 US dollars. A barrel of the North Sea Brent blend was traded at 64.19 US dollars, showing a decline of 48 cents or 0.7 percent compared to the close of the previous trading day.
In summary, China's strong GDP growth sets a favorable global economic backdrop, potentially benefiting export-driven economies like Germany. Despite the slight dip on Wednesday, the DAX outlook remains constructive with technical and fundamental factors supporting a rebound and potential new highs in the near term. Ongoing geopolitical developments and central bank guidance will be critical for market direction.
The robust growth in China's economy may boost export-driven businesses, such as those in Germany, as a favorable global economic backdrop is established. The positive outlook for the DAX, despite a slight decline on Wednesday, suggests a potential rebound and new highs in the near term, with technical and fundamental factors supporting this rebound.
