DAX gains after a cautious start to the week – supported by technology rally and AI euphoria

DAX investors are shifting up a gear after a cautious start to the week. The leading German index rose at the opening by 0.5 percent to 25,390 points after showing little change on Monday. In the first few minutes of trading, the leading German index even rose by up to 0.8 percent.

The DAX thus followed the technology rally on Wall Street. "Since today's agenda offers little new impetus, the duel between technology stocks and bond yields is likely to dominate trading," said Andreas Lipkow, analyst at broker CMC Markets. “AI euphoria is still winning this duel.” However, the more attractive the returns on the bond market become, the higher the bar will be for further price increases for stocks.

First, however, investors are looking at new economic data from Germany, which at first glance does not bode well, but does not detract from the good mood on the stock market: Incoming orders from German industrial companies fell surprisingly significantly by 10.6 percent in August, as the Federal Statistical Office announced. The slump in August is primarily due to significantly fewer large orders for military vehicles, aircraft, ships and trains.

Without taking large orders into account, incoming orders in German industry in August were almost at the same level as in July. “The fundamentally positive picture has changed little,” said economist Michael Herzum from the fund provider Union Investment. The order situation in German industry has improved significantly since autumn 2025. “The order books are well filled and mathematically offer the industry a cushion of around nine months,” said Herzum.

Whether the full order books actually result in more growth will be decided by investments. Companies still lack the confidence to ramp up production and capacities. “German industry has stabilized and the prospects are good - but it is not yet a boom,” said Herzum.

“Overall, the data-poor trading week is likely to continue to be dominated by energy prices and bond yields,” said Andreas Lipkow from CMC Markets. Investors continue to be concerned about the tense situation in the Middle East, which continues to drive up the price of oil. The North Sea Brent and US light oil WTI each increased in price by 0.7 percent to $100.99 and $90.05 per barrel respectively.

Despite increasing oil exports from the Persian Gulf and the release of strategic reserves by the G7 countries, investors fear impending bottlenecks in view of the stalled talks between the USA and Iran. Priyanka Sachdeva, analyst at Phillip Nova said: "To speak of complete normalization of supply chains does not yet appear justified." There have been renewed attacks on tankers, which have increased costs, insurance and security risks for transport. There were also renewed attacks by Iran-backed Houthi rebels in Yemen on targets in Saudi Arabia.

The persistently high yields on ten-year French government bonds remain a burden. They were recently at least below Friday's high of 4.993 percent and lost up to eight basis points in early trading. 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. This remains counted: On Tuesday morning, the European common currency was trading at 1.1206 US dollars, slightly lower than the evening before.

At the start of the week, the price initially fell to $1.1161, a low since May 2025, before stabilization began.

Positive signs for today's trading day come from overseas: Large technology stocks in particular set the tone in US trading yesterday, with Nvidia shares climbing again by around two percent. The shares of Meta Platforms, Microsoft and Tesla rose between 1.3 and around two percent.

Easing uncertainty about interest rates and a slight easing of geopolitical risks have allowed investors to focus on the extraordinary earnings growth of AI companies, analysts said. Before the end of the week, weaker US labor market data had dampened expectations that the US Federal Reserve could raise interest rates this month.

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.