The Dax, which tracks the performance of Germany's 30 largest companies, keeps hitting all-time highs. Analysts are calling this a turning point after six weak years, say Susanne Schier and Anke Rezmer in Handelsblatt, as stronger growth in the eurozone and less political uncertainty finally becomes apparent. Yet "not all is as rosy as it seems in Europe".
One key headwind is the possibility the European Central Bank will start to reverse its ultra-loose monetary policies. What's more, a survey of German executives suggests that, for the first time in two years, they are no longer buying German stocks. Other surveys of individual investors and private-equity investors are also turning less bullish.
On a forecast price-to-earnings ratio of under 14, the Dax doesn't look pricey. But note that the index is highly cyclical, and four economically sensitive stocks Bayer, BASF, Daimler and Siemens account for more than a third of the gains since December, says Jonathan Eley in the Financial Times. The rally looks vulnerable to changes in sentiment. "Investors would do well to exercise caution."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Nvidia's earnings live: China trade the key question for semiconductor giant’s resultsAll eyes are on Nvidia’s earnings release this week, as analysts question whether Blackwell sales can make up for lost China revenue following Trump’s trade crackdown
-
8 of the best lakeside properties for saleThe best lakeside properties – from a house on the southeastern shore of Loch Lomond, to a 15th-century hall overlooking a lake in King’s Lynn, Norfolk
