06.02.25 - DAX on record high

European equities are experiencing a strong upward move today, with the German stock index DAX reaching a new record high. The rally comes after the latest tariff shock on Monday and has been further supported by solid quarterly earnings reports.

Markets: DAX up more than 1% on new record high. European stock indices follow this up-move. Cryptos trading more sideways.

My View: Since the beginning of the year European equities see strong momentum, driven by unexpected inflows. The rally is supported by anticipated lower interest rates, despite persistently weak economic data and inflation remaining on elevated level. It appears that investors are beginning to reallocate a portion of their substantial US investments, potentially diversifying into other markets amid shifting economic and policy dynamics. Therefore, the uptrend could have more way to go in the short-term. For once, cryptos are not joining the euphoria, trading sideways amid the broader risk-on sentiment.
The market continues to ignore negative news and the potential risks posed by political shifts and newly announced tariffs. Given the current optimism, any unexpected event could serve as a catalyst for profit-taking.

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