Key Highlights
- DE40 (German DAX index futures) is advancing, testing the 25,000-point area.
- SAP shares surged over 6% following a positive quarterly earnings report.
- Germany's PMI data exceeded market expectations, indicating economic strength.
Market Performance
The DAX opened positively, buoyed by a strong rebound in SAP shares. The improved sentiment surrounding Germany's largest technology company has overshadowed concerns regarding new U.S. tariffs, allowing the benchmark German index to advance towards the 25,000-point mark.
SAP's shares rose nearly 7% after the company reported robust second-quarter results, particularly highlighting strong growth in its cloud business, which is a key growth driver. Given SAP's significant weighting in the DAX, this rally has helped mitigate the impact of the latest U.S. trade measures.
U.S. Tariffs Impact
The United States has implemented tariffs of 10% and 12.5% on imports from 60 trading partners, including the European Union. These measures took effect on Friday morning, coinciding with the expiration of a temporary 10% global tariff rate. However, the market's reaction has been relatively muted, as these tariffs do not impose an additional burden compared to the previous framework.
Sector Performance
Volkswagen has emerged as a notable laggard in the market, with shares declining nearly 2.5% after the automaker warned of weaker revenue despite strong demand for smaller electric vehicles. This has led to a focus on the company's deteriorating sales outlook.
Conversely, Atoss Software in the SDAX index has gained attention, with shares climbing nearly 7% following a report of strong revenue and profit growth for the first half of the year.
Economic Indicators
Germany's Composite PMI rose to 51.2, significantly above the expected 49.7 and up from 49.5 in the previous month. The Services PMI remained steady at 49.6, beating the consensus forecast of 49.0, while the Manufacturing PMI increased to 52.2, surpassing expectations of 50.5 and the prior reading of 50.3.
Technical Analysis
The DAX futures contract is currently testing the lower boundary of its ascending price channel. A move back above 25,100 points, where the 50-period EMA is located, could indicate renewed bullish momentum. Key support is identified around 24,500 points, with a break below this level potentially leading to a decline towards 23,800 points, where previous price reactions occurred.