24.02.25 09:22:19

Weekly outlook: Price gains after the election

Can Germany regain strength after a prolonged period of weakness? This is what the stock market is betting on the day after the election. But a lot also depends on the USA and China. 


24 February 2025 FRANKFURT (Frankfurt Stock Exchange). Hoping for new momentum from a change of government, the German stock market is rising on the first day after the Bundestag elections. “By and large, the financial markets responded positively to the possibility of a two-party coalition between the CDU/CSU and SPD and thus a quick formation of a government,” commented Deutsche Bank.

The DAX stood at 22,400 points on Monday morning. On Friday, it had ended trading at just 22,288 points, well below the all-time high of 22,935 points reached on Tuesday. The Stoxx Europe 600 also recorded losses at the weekend. Tariff announcements by US President Trump and statements by ECB Governing Council member Isabel Schnabel regarding a pause in interest rate cuts put an end to the euphoria. 

Uncertainty is over

According to Holger Schmieding from Berenberg Bank, Germany can end the phase of political uncertainty following the CDU/CSU's election victory. However, the new government's fiscal leeway is limited and an end to the debt brake will be difficult given the distribution of seats in the new Bundestag.

Holger Schmieding

“Rest for the DAX”

According to Andreas Hürkamp from Commerzbank, the German stock market is threatened by a dampening of sentiment despite the CDU/CSU victory. This is because there will not be a “classic” coalition such as CDU/CSU and FDP or SPD and Greens. “In the new coalition - as previously in the 'traffic light coalition' - parties with different ideas about the economy will work together.” This dampened hopes of far-reaching measures.

Regardless of this, DAX companies now generate around 80 percent of their turnover outside of Germany. It is therefore important to see how much German exports in the important US market will be slowed down by Donald Trump's import tariffs. It is also important whether China will return to stronger growth over the course of the year. “On balance, in this environment we expect the DAX, which got off to a strong start in 2025, to take a break for the time being.”

“Teflon-coated” stock markets

Robert Halver from Baader Bank is also looking at the tariff announcements. “With tariff threats of 25 percent on cars, pharmaceutical products and semiconductors from April 2, Trump is pouring water into the sweet wine of the European stock market boom,” he explains. He believes that higher tariffs are certainly possible, but that these would be lower than Trump has promised due to a concession from the EU. And if the “big stick” of tariffs were to come anyway, German car manufacturers would make a virtue of necessity and produce more in the USA. The stock markets are therefore “Teflon-coated”. 

Robert Halver

Nvidia figures eagerly awaited

Meanwhile, the reporting season continues. This week, nine DAX companies are opening their books. The US reporting season is already coming to an end, but there will be one last highlight with the Nvidia figures on Wednesday. 

Important economic and business events of the week

Monday, 24. February

10:00 am. Germany: ifo Business Climate February.

Thursday, 27. February

1:30 p.m. Minutes of the ECB meeting on January 30. The summary of the ECB Governing Council meeting should reflect a predominantly optimistic assessment of both economic development and inflation, says DekaBank. 

Friday, 28. February

9:55 am. Germany: Unemployment figures for February. Helaba does not expect any major movement in seasonally adjusted unemployment and forecasts a moderate increase of 5,000 unemployed. This means that the seasonally adjusted unemployment rate will remain at 6.2 percent.

2:00 pm. Germany: Consumer prices February. After the surprisingly significant decline in January, the German inflation rate is likely to have amounted to 2.3 percent again in February, according to Commerzbank. It expects the core rate to be almost 3 percent. 

2:30 pm. USA: Price index consumer spending excluding food and energy January. The index, which is closely watched by the US Federal Reserve, is expected to fall from 2.8 to 2.6 percent, as reported by Deutsche Bank. However, the monthly rate could rise from 0.2 to 0.3 percent, which is hardly compatible with the Fed's two percent target. 

by: Anna-Maria Borse, 24 February 2025, © Deutsche Börse AG

Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.

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