DAX falls short of record high as investors lock in profits ahead of the weekend

DAX rally fades near record high

The DAX came within touching distance of a new all-time high at 25,900 points before reversing course and nearly slipping into negative territory by the close.

The session had started on a promising note, but early gains ultimately proved insufficient to push the index to fresh record levels.

Profit-taking narrows market participation

Support from AI-related stocks and selected defensive sectors was not broad enough to sustain the rally.

The lack of wider market participation caused momentum to fade, prompting investors to take profits after a strong week for European equities.

Higher oil prices revive inflation concerns

Renewed strength in oil prices also weighed on sentiment, with Brent crude climbing back above the USD 90 per barrel mark and reigniting concerns over inflation.

Geopolitical developments in the Middle East played a less prominent role this week, as investors shifted their attention towards the ongoing earnings season. A strong rebound in semiconductor stocks also provided support for European equity markets, helping to offset the impact of weaker-than-expected Chinese manufacturing PMI data.

German labour market sends a cautious signal

Germany's labour market painted a more cautious picture of the economic recovery.

Seasonally adjusted unemployment in July came in below expectations, suggesting that the modest improvement in economic activity continues to be driven primarily by cost-cutting measures and efficiency gains rather than broad-based expansion. As a result, it remains premature to conclude that Germany has entered a self-sustaining economic recovery capable of generating meaningful employment growth.