Gains Expected – DAX Could Once Again Set Course Toward Record
Strong figures from Amazon are driving markets higher in Asia, while Wall Street is also providing positive leads. Tech stocks in particular are in demand. The DAX looks set to start trading with a solid gain.
Broker IG estimated the German benchmark index at 25,730 points ahead of the start of Xetra trading, up 0.5 percent. The all-time high currently stands at 25,900 points.
Yesterday, the DAX closed trading up 0.6 percent at 25,612 points. Positive impulses had come from US markets in the afternoon, where technology stocks in particular surged on the back of strong quarterly figures from Microsoft.
On the last trading day of the week, the positive trend looks set to continue, as Amazon also impressed investors after the US market close yesterday. The tech giant posted strong figures, temporarily dispelling concerns among some investors that its multi-billion dollar investments in new data centers might not pay off.
Amazon's net profit jumped from around 18 billion dollars in the previous year to nearly 63 billion. That is more than the market capitalization of DAX-listed company Rheinmetall. The increasing use of AI in particular is boosting Amazon's business, with cloud subsidiary Amazon Web Services (AWS) accelerating its growth significantly.
Prices on Wall Street had already risen sharply before that. The positive mood was attributable to a strong set of results from Microsoft. The stock surged by more than 15 percent, marking its biggest single-day percentage gain in 18 years. The software giant exceeded expectations with its forecasts for revenue and cloud growth.
The Dow Jones closed 1.2 percent higher at 52,208 points. The broader S&P 500 rose 1.7 percent to 7,437 points. The Nasdaq technology index climbed 2.8 percent to 25,122 points.
How quickly sentiment in equity markets can shift is also illustrated by a look at Asia: euphoria has returned there at the end of the week. After a sell-off, South Korea's benchmark index, the Kospi, is staging a comeback today, currently up around 15 percent. Japan's Nikkei index is gaining more than four percent.
Many major chipmakers are listed on the South Korean stock market, including Samsung and SK Hynix. This is why the Kospi is so sensitive to swings in market sentiment.
In China, meanwhile, weak economic data clouded the picture. Factory activity contracted unexpectedly in July as domestic demand softened and production costs remained high. The official Purchasing Managers' Index (PMI) fell to a five-month low of 49.2 points.
The new data reinforces the impression that China's economy is losing momentum. In the second quarter, the world's second-largest economy grew by just 4.3 percent year-on-year, compared with 5 percent in the first quarter.
