DAX could start optimistically despite pressure on the bond market and the French takeover

The German leading index could start the day optimistically today: The broker IG estimates the DAX to be up 0.3 percent at 25,323 points. “Investor sentiment remains as fickle as a weather vane,” wrote Timo Emden, chief market analyst at trading firm CapTrader, and continued: “Investors are moving from signal to signal, looking for a reliable navigation point between inflation concerns, monetary policy uncertainties and political question marks in the eurozone.”

Yesterday the German stock market had barely budged. After mixed trading, the leading index DAX managed an increase of 0.1 percent to 25,254 points.

The persistently high yields on longer-term US government bonds, which remain near multi-decade highs, remain a burden. The yield on the ten-year US government bond was most recently at 5.328 percent. The main concerns were the rising debt burden in the USA, extensive bond issues and high energy costs.

Yields on ten-year French government bonds also remain high, but were below Friday's high of 4.993 percent yesterday. The premium that investors demand to hold French 10-year bonds over federal bonds jumped to more than 150 basis points on Friday.

France's rising debt and the political deadlock in the run-up to next year's presidential election were particularly worrying. Last week, the French government's draft budget for 2027 contained controversial spending cuts and austerity measures. However, investors were skeptical about whether the government would get its deficit under control before the 2027 elections.

"And what we're seeing in the bond markets is having an impact on the euro," said Kathleen Brooks, an analyst at broker XTB. The common currency is currently under pressure: After the euro fell by around 2.5 percent last month, it temporarily slipped by up to 0.8 percent to $ 1.1162 on Monday.

Positive signs for today's trading day come from overseas: a rally on Wall Street driven by technology stocks gave the Asian stock markets a boost on Tuesday. The Japanese Nikkei index rose 0.7 percent. The Shanghai stock exchange was closed due to the holiday.

“The market rally was once again led by technology,” said Kyle Rodda, analyst at Capital.com. Easing uncertainty about interest rates and a slight easing of geopolitical risks would have allowed investors to focus on the extraordinary earnings growth of AI companies. Before the end of the week, weaker than expected data from the US labor market had dampened expectations that the US Federal Reserve could raise interest rates this month.

Large technology stocks in particular set the tone in US trading yesterday: Nvidia shares climbed again by around two percent. The shares of Meta Platforms, Microsoft and Tesla rose between 1.3 and around two percent.

Driven by gains in tech heavyweights, the US technology index Nasdaq reached a new record high on Monday. It ended trading with an increase of 1.1 percent to 27,477 points. The Dow Jones index of standard stocks made up for initial losses during trading and was slightly firmer at 51,267 points. The broader S&P 500 also gained momentum, rising 0.7 percent to 7,773 points.

Investors also looked at the takeover plans of the French technology group Schneider Electric: It has announced the takeover of the US software company PTC for more than 20 billion euros - it is the largest takeover in its history. Schneider Electric will pay $22.6 billion (20.1 billion euros) in cash, the company announced on Monday. The takeover creates a “leading, comprehensive software and AI company,” explained Schneider Electric boss Olivier Blum.

PTC shares shot up by a third after French company Schneider Electric submitted a $22.6 billion purchase offer. In Paris, however, the offer was met with anger from investors. The French technology group lost around ten percent.