Germany's DAX index surged to a record high on May 9, 2025, surpassing 23,500 points and erasing all losses incurred during the latest round of US-China tariff tensions. The rally reflects renewed investor optimism on easing trade risks, robust economic data from Germany, and anticipated moves from the European Central Bank.
DAX Reaches All-Time Highs
The DAX index opened at record levels on May 9, 2025, climbing to nearly 23,519 points and continuing its strong rally that began after a steep tariff-driven selloff in early April. The benchmark had previously dropped below 18,500 points due to tariff announcements from the US and retaliatory actions from China, but it has now gained back over 27% since those lows and is up 18% year-to-date[1][4].
Drivers Behind the Recovery
Investor sentiment turned positive following a finalized US-UK trade agreement and signs of easing rhetoric from the US on trade, including progress toward a US-EU deal. Expectations for upcoming US-China trade negotiations also lifted market confidence[4]. Strong German economic indicators and speculation that the European Central Bank may lower interest rates further have also attracted investors to German equities, pushing the DAX to its highest premium relative to other European indices since 2009[1][4].
Key Performers and Sector Moves
Leading the DAX gains were Siemens Energy, Daimler Truck, Bayer, Merck, BMW, Mercedes Benz Group, and Commerzbank, with individual increases between 1.7% and 2.9%. Commerzbank's shares rose nearly 2% on reports of unexpected first-quarter profit growth[4]. The market rally also reflected continued optimism over Germany's economic prospects under a new government and strong earnings reports from several blue-chip companies.
Context Within European Markets
While the DAX broke its record, the broader Eurozone index, EuroStoxx 50, remained slightly below its all-time high. Germany's outperformance has increased the premium at which the DAX trades relative to its continental peers, underscoring renewed demand for German assets in the current macroeconomic climate[1][4].
Analysis
The DAX's record-setting rally follows a volatile period driven by international tariff disputes. This recovery is supported by concrete developments in global trade relations, particularly the finalized US-UK trade agreement and perceived progress toward further trade deals involving the US, EU, and China. Strong German economic data and the prospect of supportive ECB monetary policy have provided additional momentum. Experts attribute the gains both to improved macroeconomic fundamentals and renewed investor risk appetite, though some caution that the pace of the rally may moderate if external risks resurface[1][4].
Outlook
Market participants are watching closely for further progress in US-EU and US-China trade negotiations, along with any policy signals from the European Central Bank. The DAX's recent momentum could continue if trade risks ease further and if German economic data remains strong. However, market volatility could return should new trade disputes or geopolitical events arise. Investors will also assess whether the DAX's premium relative to peers is sustainable in the coming months[1][4].
