German DAX Rebounds on Monday, Gains Nearly 0.5% Amid Mixed Economic Signals

The German stock market staged a modest recovery Monday morning, with the DAX index climbing back from early weakness to post solid gains. After dropping to 24,339.16 in early trading, the benchmark DAX surged 101.21 points, advancing 0.41% to reach 24,616.94 around midday. The rebound reflected selective buying interest, though market participants remained cautiously optimistic as attention turned toward an upcoming European Central Bank monetary policy announcement.

Market Dynamics: Optimism Tempered by Caution

Investors displayed a mixed sentiment throughout the session. While the DAX managed to recover lost ground, underlying concerns about geopolitical tensions—particularly Iran’s warnings of potential escalation—kept some traders on edge. The broader economic backdrop remained uncertain, creating a balancing act between positive data releases and lingering risks that could impact investor confidence in the near term.

Commodity-related stocks bore the brunt of selling pressure, dragged down by weakness in metal and energy prices. This sector underperformance contrasted sharply with strength in other areas of the market, suggesting a rotating demand among investors seeking exposure to defensive and cyclical positions.

Individual Stocks Show Resilience Across Sectors

Leading the gainers, Adidas surged nearly 2.3%, while Hannover Rück climbed 2%. Financial and telecom heavyweights also participated in the advance, with Deutsche Telekom and Allianz posting gains of 1.85% and 1.7%, respectively. Healthcare and industrial names including Fresenius (up 1.4%), Gea Group, Munich RE, SAP, Henkel, and Commerzbank each rose between 1% and 1.15%.

Defensive plays also attracted interest, with E.ON, Fresenius Medical Care, Heidelberg Materials, Beiersdorf, and Mercedes-Benz posting incremental advances. On the flip side, Rheinmetall, Brenntag, Infineon Technologies, and Siemens Energy retreated 1% to 1.7%, while Symrise drifted down 0.7%. Deutsche Bank, Bayer, and Volkswagen declined only marginally, resisting broader selling pressure.

Economic Data Provides Glimmers of Hope

Recent economic releases offered some encouragement to the DAX bulls. German retail sales data from Destats revealed a 0.1% monthly increase in December, reversing November’s 0.5% decline. The annual retail growth rate accelerated to 1.5% compared to 1.3% in the prior month, suggesting underlying consumer resilience despite economic headwinds.

Manufacturing activity painted a more complex picture. The euro area manufacturing sector showed signs of stabilization, with the HCOB manufacturing Purchasing Managers’ Index rising to 49.5 in January from a nine-month low of 48.8 in December, according to final S&P Global survey results. Despite the improvement, the index remained below the 50.0 contraction threshold for the third successive month.

Germany’s own factory PMI climbed to a three-month high of 49.1 in January from 47.0 in December, with output returning to growth after a brief contraction. The nation’s manufacturing sector has nevertheless remained in contraction for 43 consecutive months, underscoring persistent structural challenges within the industrial base. Nevertheless, the upward momentum in recent PMI data suggests that the worst may be behind the sector.

The DAX’s recovery Monday captured this sense of cautious optimism, as investors digested mixed but slightly encouraging economic signals while awaiting the European Central Bank’s policy direction.