DAX holds on to gains as investors question how the AI boom will be financed

Despite Wall Street reversing course in the afternoon, the DAX managed to hold on to its gains throughout the session. However, the optimism at the start of the week surrounding Russia's potential return to international energy markets quickly faded. Geopolitical uncertainties remain too significant, while actual relief from energy prices and bond yields has so far been too limited. France remains a particular concern for investors after the yield spread over German government bonds widened once again.

Concerns about financing the massive investments in artificial intelligence also persist. Oracle's corporate bonds are coming under increasing pressure, with their credit risk profile approaching high-yield territory. This raises the question of how long hyperscalers can continue to finance their enormous investment programmes without rising capital costs weighing on their business models and valuations. The AI boom is not currently being held back by the technology itself; instead, its future success may increasingly be judged by the cost of financing it.

This puts the emerging earnings season even more firmly in the spotlight. Earnings expectations, particularly in the US, are exceptionally high. After weeks of rising bond yields and elevated energy prices, companies themselves must now provide the justification for further gains in share prices. The earnings season will therefore be a litmus test for equity markets. With valuations already stretched, simply meeting expectations is no longer enough. Companies increasingly need to deliver positive surprises to give investors fresh reasons to buy. The recent easing of tensions in financial markets therefore remains on fragile ground.