DAX retreats after fresh record as rally sustainability comes into question
The DAX reached a fresh all-time high of 26,574 points after US inflation data, but profit-taking pushed the index back towards the previous day's level. While technology and defence stocks continue to support European equities, narrow market breadth and declining trading volumes are raising questions over the sustainability of the rally.
Chief Market Analyst
DAX slips back after fresh record
The DAX climbed to a fresh all-time high of 26,574 points following the release of US inflation data, but some investors in Frankfurt used the move as an opportunity for more extensive profit-taking.
The selling pushed the index back towards the previous day's level. While the DAX failed to secure another record close, buying momentum remains evident across European equity markets, increasingly concentrated in technology and defence stocks.
Technology and defence stocks remain resilient
Within the DAX, familiar names such as Siemens Energy, Rheinmetall and Siemens remained in positive territory even as the broader market moved lower during the afternoon.
TKMS provided a positive read-across for Rheinmetall following its quarterly results, while Infineon, Siemens Energy and Siemens benefited from the strong technology-sector lead from the United States and Asia.
Narrow leadership raises sustainability questions
However, the fundamental issue remains that the DAX rally continues to be driven by only a relatively small number of stocks.
Even when the index reached its new all-time high, fewer than half of its 40 constituents were trading in positive territory. Trading volumes also continue to decline significantly, raising questions over the sustainability of the current rally.
Investors remain cautiously optimistic
Nevertheless, overall market sentiment remains cautiously optimistic, with investors so far largely unfazed by rising energy prices.
For the time being, little appears capable of stopping the bulls.
US inflation relief supports Wall Street
In New York, the relief following the latest US consumer price data was clearly visible. Headline inflation came in at 3.4%, while the core rate stood at 2.5% in July.
Although inflation therefore remains well above the Federal Reserve's 2% target, the pace of price increases is slowing. Average wages also declined by 0.2% in July. The resulting reduction in fears of another interest rate hike provided support for Wall Street and helped equities move higher.
DAX quietly extends record run as US inflation data could set the tone
The DAX pushed to another all-time high as investors continued to look past geopolitical risks and rising oil prices. Strong demand for AI and semiconductor stocks is helping sustain risk appetite, but today's US consumer price data could revive interest-rate concerns and set the tone for the next market move.
DAX keeps record high in sight as investors avoid profit-taking
The DAX remains within reach of its record high just below 26,450 points as investors continue to bet on an extension of the rally that began at the start of August. Geopolitical risks around Iran and the Strait of Hormuz are still having little impact, while AI enthusiasm, hopes of a European recovery and tomorrow's US inflation data remain in focus.
DAX starts the week quietly as policy and geopolitics stay in focus
The DAX traded in a narrow range of just over 100 points on Monday as investors slipped back into summer mode after the index's recent record-breaking run. Attention remains focused on the Iran conflict, energy prices and monetary policy, while AI stocks, precious metals and rare earths continue to attract selective interest.