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The German DAX index rose to a record high on Friday as investors optimism in US trade transactions boosted global markets and became the first major European benchmark to recoup losses caused by Donald Trump’s tariff threat.
The index was 0.7% higher in morning trading after the announcement of the US-UK trade deal on Thursday followed calls between Trump and Germany’s new prime minister, Friedrich Merz.
Dax’s return to an all-time high reflects a wave of enthusiasm for German stocks that was ignited at the beginning of the year by Mertz’s plans to increase borrowing and inject hundreds of billions into the country’s military and infrastructure.
Emmanuel Cow, head of Barclays’ European equity strategy, said trade news has boosted the stock market widely. However, he added, “There is extra excitement in Germany as part of this revival story and the arrival of the new government.” “I’m more and more interested in Germany.”
European stocks outperform this year’s Wall Street peers due to optimism about defense spending, combining increasing fears about the impact of Trump’s trade war on the US economy.
DAX is up about 18% per year. US stocks have recovered losses since Trump’s “liberation day” tariff announcement in early April, but the S&P 500 benchmark is well below its February’s all-time high, down nearly 4% so far in 2025.
This has partially narrowed the big valuation gap between US and European stocks, and has expanded in recent years due to unforgiving rallies of US tech stocks.
