The benchmark DAX has climbed 6% this quarter, supported by energy-intensive firms that make up approximately a third of the index. Broader economic optimism is reinforcing these market gains, as reflected by the Ifo business climate index hitting its highest mark since 2023. Government fiscal initiatives are projected by UBS economists to boost growth by roughly 60 basis points in both 2026 and 2027. However, domestically focused mid-caps are trailing behind larger blue-chip corporations while waiting for the structural rollout of these state funds.
Key points
Energy-intensive businesses are driving a substantial turnaround for the country's main s…: Energy-intensive businesses are driving a substantial turnaround for the country's main stock benchmark.
State fiscal spending is broadening corporate earnings upgrades beyond the initial defens…: State fiscal spending is broadening corporate earnings upgrades beyond the initial defense sector winners.
Domestically oriented mid-cap companies continue to underperform large caps as fiscal all…: Domestically oriented mid-cap companies continue to underperform large caps as fiscal allocations deploy gradually.
Sources checked by our analysis pipeline: 1
The German stock market has a lot going for it right now, with lower oil prices and a broadening rally from software to chemicals and consumer stocks powering the country’s shares.
After underperforming most European and benchmarks in 2026, the DAX has rallied 6% to a record high this quarter. Falling oil prices have done most of the heavy lifting, benefiting the energy-intensive firms that make up about a third of the index. The scare in the artificial intelligence trade has been a boon for software stocks such as S SE, which accounts for about 12% of the DAX’s weight.
“The DAX has benefited from its cyclical sector mix, particularly its high technology exposure, where the combination of software and hardware has provided some protection,” said Deutsche Bank AG strategist Carolin Raab. “The relatively low exposure to traditional energy and basic resources has also helped.”
The rally has been broadening fast, with about 80% of DAX members trading above their 200-day moving average and 18% making fresh 52-week highs just this week. Only the ultra-defensive Swiss SMI is seeing stronger…
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