The DAX's record-breaking streak took a breather on Thursday, dropping 0.16% to 16,628.99 points. This pause is seen as healthy after seven consecutive days of gains, with the index now up an impressive 19.5% since the year began. Meanwhile, the MDAX of medium-sized companies slid 0.76% to 26,534.94 points.
Market analysts attribute this pause to heightened optimism and expectations of interest rate cuts priced in, with the upcoming US labor market report serving as the next potential trigger. Interestingly, the almost unchanged initial jobless claims in the US did not sway markets on either Wall Street or in Frankfurt.
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The DAX has surged, setting 19 records in 2025, maintaining a gain of almost 13%. US investments, particularly in AI, have significantly boosted the DAX, with Trump's administration planning to invest $100 billion in new data centers as part of the "Stargate" project. However, inflation fears and the possibility of an end to the interest rate cut cycle have put a damper on the DAX's climb, causing it to lose 1.80%.
Political risks also loom large, with the uncertain formation of a German government and the potential introduction of US punitive tariffs on April 1st. Conversely, medium-sized companies (MDAX) continue to experience challenges due to tariff threats and profit-taking after hitting a new record high. Yet hopes for a resolution to the war in Ukraine and post-election reforms have provided a tailwind, propelling the MDAX by nearly 8% in 2025.
Anticipation of interest rate cuts and significant AI investments are known to provide a positive impact on the German stock market. However, the potential realignment of global trade relations, including potential US punitive tariffs, poses a significant risk.
