DAX Expectations: Experts Bullish on a 20,000+ Point Leap
Anticipating a Potential Super Year for DAX Investments in 2025?
It's a rosy outlook on the stock market horizon. Finance gurus are looking forward to the new year with optimism, foreseeing the DAX breaching the 20,000 milestone. A peek at the forecasts of prominent German banks reveals this. Commerzbank views the DAX in the range between 19,900 and 22,300 points, DZ Bank aims for an index level of 21,500 points by the end of 2025, and Deutsche Bank predicts 20,500. As we speak, the DAX hovers at 19,800 points, signaling a potential surge of up to 13 percent based on professional predictions.
What drives the upward trajectory, but also poses a risk factor, is none other than Donald Trump. Tax cuts and deregulation by the upcoming US president could boost German firms with US business. However, the implementation of tariffs could inflict significant damage. "An intensifying trade conflict between the USA and China would adversely impact global trade, and the DAX as an export-heavy index would likely bear a disproportionate brunt," warns Andreas Hürkamp, equity strategist at Commerzbank.
Following the European Central Bank and the American Fed's recent reduction in interest rates, monetary policy might diverge: "The announced tariff hikes are unfavorable conditions for a long-term US monetary policy easing. In the eurozone, moderate inflation and weak growth offer the ECB more leeway," says Christoph Kutt, head of fixed income research at DZ Bank.
Important turning points will also come from elections and discussions on a reform of the debt brake: "Germany stands at an economic crossroads. The outcome of the upcoming elections in February 2025 and the debate about a reform of the debt brake will be crucial for the economic outlook. While there are temporary uncertainties, investments in future topics such as infrastructure and artificial intelligence could generate long-term stability and growth," explains Robin Winkler, chief economist Germany at Deutsche Bank. Another growth catalyst could come from the European level through fiscal programs such as the Draghi plan with annual investments of 800 billion euros. According to Deutsche Bank's analysis, the main beneficiaries would be infrastructure, renewable energies, logistics and mobility, as well as the health and housing sector.
€50 Billion in Dividends Await Investors
Analysts predict DAX companies will record a 10 percent increase in profits in the forthcoming year. Commerzbank finds this too optimistic and estimates a 5 percent increase instead. About half of the 40 index components are expected to boost their dividends. "Particularly in the DAX sectors of banks, telecommunications, insurers, and utilities, investors will find many companies with rising dividends," expects Commerzbank. However, cuts may loom in the cyclically sensitive sectors of auto and chemicals. The total dividend of the DAX is expected to shrink by 4 percent to €50.4 billion according to Commerzbank's calculations.
Stock analysts from Germany foresee better potential in the American S&P 500 than in the DAX. Deutsche Bank expects 6,500 points by the year-end, and DZ Bank even envisions 6,900. With a current level of around 6,000 points, this translates to a potential uptick of up to 15 percent.
Investors stand to gain from dividends amounting to €50 billion, as multiple DAX companies are anticipated to boost their payouts, particularly in sectors including banks, telecommunications, insurance, and utilities.
In contrast, the outlook for personal-finance decisions might suggest a more attractive investment opportunity in the American S&P 500, as German stock analysts predict potential gains of up to 15% by year-end, surpassing the projected growth in the DAX.
