German Stock Market Climbs Nearly 0.5% As Economic Data Provides Support

Germany’s benchmark DAX index rebounded Monday morning, gaining approximately 0.5% to reach 24,616.94 points after an early-session dip to 24,339.16. The modest but meaningful recovery reflected a delicate balance between cautious investor sentiment and encouraging economic signals from the eurozone. Markets remained vigilant ahead of the European Central Bank’s monetary policy announcement, while geopolitical uncertainties involving Iran continued to weigh on broader market confidence.

Economic Data Guides Market Direction

The market’s resilience drew support from improving German economic indicators. Retail sales data from Destats revealed unexpected strength, with monthly sales climbing 0.1% in December—a reversal of November’s 0.5% contraction. On an annual basis, December retail sales expanded 1.5%, accelerating from November’s 1.3% increase, suggesting emerging consumer demand despite broader economic headwinds.

The eurozone manufacturing sector, though still contracting, showed signs of stabilization. The HCOB manufacturing Purchasing Managers’ Index rose to 49.5 in January, up from December’s nine-month low of 48.8, according to S&P Global’s final survey. While readings remained below the 50.0 threshold indicating contraction for the third consecutive month, the improvement was notable. Germany’s factory activity specifically edged higher to 49.1 in January from 47.0 previously, as output returned to growth following December’s temporary weakness—despite the nation experiencing 43 consecutive months of manufacturing contraction overall.

Individual Stocks Show Mixed Signals

The broad index recovery masked divergent stock-level movements. Defensive and consumer-oriented names led advances, with Adidas climbing nearly 2.3%, while reinsurer Hannover Rueck gained 2%. Deutsche Telekom and Allianz posted respective gains of 1.85% and 1.7%, reflecting investor appetite for stable blue-chip stocks. Fresenius, Gea Group, Munich RE, SAP, Henkel, and Commerzbank each advanced between 1% and 1.15%, while E.ON, Fresenius Medical Care, Heidelberg Materials, Beiersdorf, and Mercedes-Benz posted more modest gains.

Conversely, commodity-sensitive and energy-related shares faced headwinds due to weak metal and energy prices. Rheinmetall, Brenntag, Infineon Technologies, and Siemens Energy each declined between 1% and 1.7%, while Symrise drifted down 0.7%. Deutsche Bank, Bayer, and Volkswagen experienced marginal declines, highlighting the sector’s struggle amid global commodity pressure.

Manufacturing Sector Remains Under Strain

Despite the positive PMI revision, Germany’s persistent manufacturing contraction underscores structural challenges facing Europe’s largest economy. With the sector in contraction for 43 straight months, the gradual improvement in January’s figures—while encouraging—remains insufficient to signal a robust recovery. Investors will closely monitor whether this momentum continues and how the ECB’s monetary policy decisions influence industrial output in coming months. The recovery in retail sales provides some counterbalance to manufacturing weakness, though the overall economic picture remains mixed heading into early 2026.