DAX Sees Renewed Momentum as German Sentiment Rebounds

The DAX index ticked up 0.2% on Friday, driven by fresh optimism in Germany’s economic landscape, as investor confidence grew with the first positive shift in business sentiment in six months. Top DAX performers included Daimler Truck Holding AG, with a 3.9% increase, Siemens Energy AG, up 2.3%, and Puma SE, rising 2.2%.

The Ifo Business Climate Index, which surveys around 9,000 businesses, rose to 86.5 in October, an improvement over September’s 85.4 and above the anticipated 85.6. The index is a critical barometer of Germany’s economic health, and the latest increase suggests the economic downturn may be slowing.

In the manufacturing sector, capacity utilization decreased slightly by 1.2 percentage points to 76.5%, reflecting a continued struggle to reach the long-term average of 83.4%. Despite the ongoing challenges, there’s cautious optimism, as businesses view current conditions more favorably, hinting that the worst may be over. The service sector also helped stabilize the economy, especially in logistics, tourism, and IT, bringing the Business Climate Index back to positive territory.

The Purchasing Managers’ Index (PMI) for October further reinforced this sentiment, showing that Germany’s service sector has expanded faster than expected, while manufacturing’s contraction has eased. Although the Composite Output Index remains in negative territory, suggesting the economy isn’t out of the woods, the slowdown in contraction offers hope amid high energy costs and increased competition from China.