FRANKFURT (DEUTSCHE-BOERSE AG) - The German benchmark index is marching from one high to the next. Analysts warn of growing risks in view of the valuations.
June 10, 2025. FRANKFURT (Borse Frankfurt). For five weeks in a row now, the DAX has managed to set a new all-time high. Last Thursday, the index set a new record of 24,479 points, its 30th record high this year. The German benchmark index ended the week up 1.3 percent at 24,304 points. The Stoxx Europe 600 gained 0.9 percent to 553.64 points. This is still around 2 percent below the high reached at the beginning of March. Since the correction low in April, the index has risen by "only" a good 19 percent, while the DAX gained 31 percent over the same period.
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On Whit Monday, the DAX posted a slight loss and closed at 24,174 points. It is also trading in this range this morning. The major US indices, the S&P 500 and Nasdaq 100, gained slightly at the beginning of the week. Asian stock markets are also looking positive on Tuesday.
Technical picture: Bollinger Bands as a guide
From a technical perspective, the record highs are generally positive because they mean that there are no longer any significant horizontal resistance levels. Of course, this is no guarantee that prices will continue to rise. Jorg Scherer of HSBC has been recommending for several days that investors take a close look at the Bollinger Bands on the DAX. This volatility indicator has narrowed significantly due to the "lack of movement in recent weeks," which in the past has often been "the ideal breeding ground for a new volatility impulse," i.e., a sharp rise in prices. In addition, the upper and lower Bollinger Bands (currently at 24,449 and 23,987 points, respectively) are coinciding with other important technical chart indicators. Therefore, a breakout in either direction "could well serve as a strategic guide."
DAX with valuation problem
Meanwhile, many fundamental analyses are taking a rather skeptical view of the stock markets. "The DAX is rushing from one high to the next as if the tariff issue were off the table. The risk of negative surprises is therefore greater than the chance that things will get even better," warns Christian Apelt of Helaba. In recent weeks, investors have "anticipated a great deal of positive developments," particularly with regard to the tariff issue. As a result, the DAX is now expensive by historical standards, and the valuation expansion is "not sufficiently supported by rising economic leading indicators." Technically, too, the DAX looks "overheated." An index level of a good 16 percent above the 200-day average has often led to corrections in previous phases. At the end of the year, the strategist expects the DAX to be around 22,000 points, just below its current level.
Christian Apelt
Christian Apelt
MDAX and SDAX have an advantage in the long term
Soren Hettler of DZ Bank believes that the DAX has been "out of control for several months." Not only the price-earnings ratio, but also other key indicators are now in the "expensive" range. This makes the German stock index particularly vulnerable to setbacks in the short term if "one of the numerous stumbling blocks" proves to be too big. However, the analyst also offers hope. In the long term, government investment programs would give the German stock market "structural tailwind." He sees good opportunities here above all for the MDAX and SDAX, because the sales of the companies listed here are more strongly geared to the German economy and the share of manufacturing is higher than in the DAX. "This is where investments in Germany's physical and digital infrastructure and the modernization of state institutions are particularly needed."
Important economic and business dates for the week
Tuesday, June 10
10:30 a.m. Germany: sentix economic index. Following the extraordinary fluctuations of recent months, Deka strategists expect the sentix economic index for the eurozone to stabilize this time around. Stable positive surprises in economic indicators and robust stock markets should therefore have led to a slight improvement in sentiment in June.
Wednesday, June 11
2:30 p.m. USA: Consumer prices. According to Deka, the data for May will serve as an indication of when the first significant tariff-related price effects will become visible. While the overall rate is likely to be held back by falling energy prices, the effects of tariffs should become more apparent in prices excluding food and energy.
Thursday, June 12
2:30 p.m. USA: Producer prices. Commerzbank analysts expect "normality" to return after the surprisingly sharp decline in April. Specifically, the core rate is expected to have climbed by 0.3 percent compared with the previous month, giving the US Federal Reserve little reason to cut interest rates in the near future.
Friday, June 13
11:00 a.m. Eurozone: Industrial production. Following significant growth in March, Helaba strategists are now expecting a decline of 1.3 percent month-on-month. This would represent an increase of 1.7 percent for the year as a whole.
4:00 p.m. USA: University of Michigan Consumer Sentiment Index. While the Conference Board's latest survey signaled an improvement, particularly in expectations, economists surveyed by Commerzbank expect the index to remain largely unchanged at 52 points.
By Thomas Koch, June 10, 2025, © Deutsche Borse AG
(Deutsche Borse AG is solely responsible for the content of this column. The articles are not a solicitation to buy or sell securities or other assets.)
