FRANKFURT (dpa-AFX) – After three consecutive weak sessions triggered by the latest tariff shock, the German stock market rebounded on Thursday. The threat of new US tariffs against eight European countries was taken off the table following a meeting between US President Donald Trump and NATO Secretary General Mark Rutte. In addition, there appears to be renewed momentum in peace talks concerning Ukraine, as representatives from the US, Ukraine, and Russia are set to negotiate once again over a possible end to the war.

Another positive development, according to Christine Romar, Head of Europe at CMC Markets, was the US Supreme Court's doubts about the legality of Fed Director Lisa Cook's dismissal and its emphasis on the independence of the US Federal Reserve, which helped restore a positive mood for equities.

The DAX, which had climbed to just below 25,000 points in the morning after dropping to as low as 24,350 points the previous day, closed 1.20 percent higher at 24,856.47 points. Since its record high of 25,507 points in mid-January, the German benchmark index has now given up 2.5 percent.

The MDAX of mid-cap stocks ended trading 2.40 percent higher at 31,687.04 points. Gains were also recorded across Europe. The Eurozone blue-chip index EuroStoxx 50 rose 1.25 percent to 5,956.17 points. Outside the Eurozone, the Swiss SMI and the British FTSE 100 posted more moderate gains. Across the Atlantic, US stock markets also moved higher.

Trump and Rutte reached an agreement on the sidelines of the World Economic Forum in Davos to establish a framework for a future accord regarding Greenland and the entire Arctic region. However, details about the planned agreement between the US and NATO remain unknown.

“Much more important for investors is the information that the threatened additional tariffs will not take effect on February 1,” commented portfolio manager Thomas Altmann of QC Partners. Whether the Greenland issue can be resolved to everyone's satisfaction in the long term remains open. Market analyst Daniel Kostecki of CMC Markets is skeptical regarding aspects of military security and potential future raw material projects. “Europe could end up with nothing more than vague security assurances that already align with US national interests,” he fears.

While auto stocks such as VW, BMW, and Mercedes responded to the news with significant gains, defense stocks like Rheinmetall at the bottom of the DAX, as well as Renk and Hensoldt in the MDAX, saw noticeable declines. Within the automotive sector, carmaker VW also impressed with its cash position in the Automotive division. Its shares led the DAX with a 6.5 percent gain. Mercedes rose by 1.8 percent and BMW by 1.4 percent. Porsche AG gained 2.5 percent in the MDAX.

Investors also reacted positively to Deutsche Börse's multi-billion euro takeover bid for fund distribution specialist Allfunds. Shares of the market operator based in Eschborn rose by 2.3 percent. The anticipated cost synergies were particularly well received. There was also approval for the fact that Deutsche Börse, with this move, is broadening its business and becoming less dependent on cyclical trading activities.

In contrast, Carl Zeiss Meditec slumped by 16.7 percent to a ten-year low. After a weak performance in the first three months of the new 2025/26 fiscal year through the end of December, the medical technology company is unlikely to meet its annual targets.

Ionos closed 4.3 percent higher following an upgrade by Oddo BHF. Shares of parent company United Internet also benefited significantly, rising by 8.0 percent. The transformation of the internet, driven in part by generative AI, represents an opportunity for the web hosting provider, analyst Stephane Beyazian explained in his new “Outperform” rating.

--- By Claudia Müller, dpa-AFX ---