Germany’s leading index, the DAX, reached a new all-time high of 25,826 points on Friday, closing 0.8 percent higher at 25,779 points. The trigger was weak US labor market data, which fueled speculation that the US Federal Reserve would hold off on rate hikes. Ulrich Stephan, chief investment strategist for private and corporate clients at Deutsche Bank, said signs of slowing employment growth reduced the likelihood of rate hikes in 2026. The market now prices in only a 75 percent probability by year-end. Stephan cited US consumer price inflation on July 14 as the next key data point.
Despite the record mood, analysts remain cautious. Timo Emden of Emden Research warned that while the latest US jobs report has temporarily taken the wind out of rate hike fears, “the good mood on the stock markets should not mask the fact that considerable uncertainties continue to smolder beneath the surface.” These include risks in the Middle East, uncertainty about the future path of central bank rates, and critical questions about the AI sector.
Positive impulses could come from the oil market. The OPEC+ cartel agreed to increase production from August: output is to rise by 188,000 barrels per day. Similar increases had already occurred in June and July, but they remained largely ineffective due to the closure of the Strait of Hormuz to tankers from key producers such as Saudi Arabia and Kuwait. High energy prices have recently driven inflation worldwide.
Support could also come from Wall Street: futures markets point to a friendly start to trading. On Thursday, the Dow Jones closed up 1.1 percent at 52,900 points, the S&P 500 was virtually unchanged at 7,483, and the Nasdaq fell 0.8 percent to 25,832 points.
Source: Tagesschau
