The most effective antidote to tariff anxiety appears to be solid quarterly earnings, and investors received a triple dose today. Vonovia has reported a turnaround in the real estate market, Siemens Energy is reinstating its dividend, and Commerzbank has performed so well that it raised its guidance.
For weeks, investors maintained confidence that Trump’s tariffs would not leave a significant dent in economic data or quarterly results. However, this narrative has faced challenges recently as several companies issued profit and revenue warnings, with even large corporations reporting billion-dollar losses due to tariffs. Nevertheless, it seems that the costs associated with these tariffs have not fundamentally altered growth trajectories. Rather, they appear to inflict only higher one-time costs, leading to slimmer margins than before. Tariffs seem unlikely to reverse the underlying trends in margins and profitability.
Investors are viewing tariff costs as one-off effects and are refocusing on future prospects. With positive guidance from various companies, buying sentiment has returned, allowing the DAX to reclaim the 24,000-point threshold—exactly where the sell-off began on Friday.
Interestingly, the correction at the end of last week on Wall Street has already led to a noticeable cooling of investor sentiment. When declines provoke such rapid shifts in mood, it indicates a healthy market. While the DAX has successfully executed a trend reversal, the upward trend among major U.S. indices remains intact. The sustainability of the DAX’s trend reversal could be precarious without confirmation from Wall Street. Bargain hunters investing in the DAX are, therefore, banking on the continuation of the record chase in New York.
By Jochen Stanzl, Chief Market Analyst at CMC Markets
