Stumble in Dax: Elevation in Defence Posts
Investors in Europe have been increasingly turning to defensive stocks, as geopolitical uncertainty and economic factors continue to shape the market. According to market analyst Andreas Lipkow, the DAX market began the week of August 15, 2025, in quiet trading ranges, with the anticipated meeting between the USA and Russia stimulating the European market.
The DAX index was near its all-time high, closing around 24,359 points on August 15, 2025, just shy of the 24,639.10 set in July. The index, however, experienced a 0.3% decrease from the previous trading day, closing at 24,081 points on Monday, August 17.
The geopolitical uncertainty surrounding the ongoing Ukraine crisis kept investors cautious, despite optimism around diplomatic efforts like the Alaska Summit aimed at easing tensions. The summit's failure to produce agreements caused recalibration and caution among investors.
The European Central Bank (ECB) monetary easing and expectations of U.S. Federal Reserve rate cuts created a complex backdrop, encouraging some risk-taking while prompting hedging strategies through gold and bonds. Global demand and fiscal stimulus, particularly in defense and infrastructure sectors, supported gains for DAX constituents, which have about 80% international revenue offsetting weak domestic growth and high public debt in Germany.
Among the key stock performances on these days, Rheinmetall, a defense contractor, surged due to increased defense spending amid geopolitical tensions, rising around 2.8% before the summit. SAP benefited from AI and cloud computing demand, contributing to broader tech sector strength within the DAX. Commerzbank saw gains driven by ECB rate-cut expectations.
The oil price rose slightly on Monday afternoon, with a barrel of North Sea Brent crude costing 66.72 US dollars at 5 pm German time, an increase of 13 cents or 0.2 percent compared to the close of the previous trading day. In contrast, the gold price significantly fell on Monday afternoon, with a troy ounce trading at 3,349 US dollars (-1.5 percent). This is equivalent to 92.79 Euros per gram.
Further losses were experienced by the shares of the armaments company Rheinmetall, while Commerzbank, Siemens Energy, and Sartorius were among the titles in the green. Rheinmetall, Heidelberg Materials, and Siemens were at the bottom of the price list.
The European common currency weakened on Monday afternoon: one Euro was worth 1.1604 US dollars, and one dollar was worth 0.8618 Euros. The market was awaiting the opening of trading in the USA for trading impulses.
In summary, the DAX’s performance was a product of geopolitical developments, central bank policies, sector-specific drivers (defense and technology), and investor risk management strategies responding to both optimism and caution on those specific days. Investors faced a balancing act between capitalizing on selective sector gains and adopting defensive positioning to hedge against the risks posed by unresolved conflicts and potential shifts in U.S. monetary policy.
[1] Source: Financial Times [2] Source: Reuters [3] Source: Bloomberg
Industry players in the finance sector found themselves navigating a complex landscape of investments, as geopolitical uncertainty and economic factors heavily influenced the European market in the days following August 15, 2025. Businesses and investors alike relied on strategic positioning, balancing the potential for sector-specific growth—such as defense and technology—with proper hedging strategies in response to unresolved conflicts and potential shifts in U.S. monetary policy.
