10/03/25 09:26:20

Weekly outlook: “Very significant impact on capital markets”

The planned billions in spending on defense and infrastructure are driving German shares upwards. The second and third tiers are also benefiting. US equities, on the other hand, are suffering from US President Trump's tariff policy.


10 March 2025 FRANKFURT (Börse Frankfurt). The enthusiasm continues on the German stock market. After a weak Friday, it is on the rise again at the start of the new week. “The leading German index is benefiting from the planned financial packages for armaments and infrastructure in Germany and also from the high willingness to spend at EU level,” says Ralf Umlauf from Helaba. These factors give hope for an economic recovery, especially in German industry.

DZ Bank shares this view. If two “special pots” now become reality, shares would probably have considerable further upside potential - even outside of the defense industry, says Michael Holstein. “All in all, the upcoming decisions in European security policy and the decisions of the next German government are likely to have a very significant impact on the economy and capital markets.”

Following the setback to 23,009 points at the close of trading on Friday, the DAX was back at 23,197 points on Monday morning - not far from the all-time high of just under 23,476 points reached on Thursday. The Stoxx Europe 600 is also back on course for the latest record. The MDAX is also a clear beneficiary of the planned spending packages. The US stock markets, on the other hand, continue to weaken. The Nasdaq 100 recently fell to its lowest level since the beginning of November. 

Everything already priced in?

According to Philipp Schweneke from DWS, the DAX has also benefited from an investor exodus from the US market. He also points to the nervousness regarding US valuations and the economic outlook under Trump. In the meantime, the ECB has supported the European markets by cutting interest rates, making equities more attractive relative to traditional savings products. “In addition, the interest burden on companies should decrease over time,” he adds.

In addition, the election victory of the CDU/CSU has given German equities a boost, especially the domestic market-oriented companies in the MDAX. There are now hopes of a pro-business government with the prospect of an increase in defense spending and more investment in infrastructure. “However, we believe that much of this hope may already be priced into German equities,” notes Schweneke.

Trump's “tariff Yo-Yo” causes uncertainty

Robert Halver from Baader Bank speaks of Trump's “tariff Yo-Yo”, which is causing uncertainty among US companies. Planning is difficult, as is investing. In any case, US companies would pass on customs costs to consumers, which has already led to rising inflation expectations. Together with fears of job losses in the public sector, this is having a dampening effect on consumer sentiment. “In fact, US corporate earnings growth, the fundamental driver of American equities, is at risk of being damaged.”

This week, many companies are again publishing their figures for the fourth quarter of 2024, including Volkswagen, Puma, Rheinmetall, BMW and Daimler Truck. 

Robert Halver

Important economic and business events of the week

Monday, 10 March

8.00 am. Germany: Industrial production January. 

Wednesday, 12 March

1.30 pm. USA: Consumer prices February. According to Commerzbank, inflationary pressure in the USA was probably also high in February. Although the upward pressure on prices for services is easing, prices for goods are no longer falling.

Friday, 14 March

USA: Possible government shutdown. The next “government shutdown” is looming in the USA, according to Deutsche Bank. If this were to occur, federal government agencies would have to suspend most of their work. In order to avoid this situation, a compromise must be found in the US Congress. “The closer the deadline gets, the more nervous the markets could react.”

3.00 pm. USA: University of Michigan Consumer Confidence March. The second publication of the consumer climate for the month of February caused a stir, as DekaBank notes. It was not only the sentiment value that was revised downwards unusually significantly. Long-term inflation expectations have also risen further. In view of the current customs issue, the March data would probably paint a similar picture: Deteriorating sentiment and a further rise in inflation expectations.

by: Anna-Maria Borse, 10 March, 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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