The DAX index, along with its counterparts MDAX and TechDAX, ended on a positive note in the last regular trading session, which happened on the Thursday before Good Friday. This positive close is noteworthy, especially considering the contrasting instability that marked the beginning of the same trading session in the United States. This suggests a growing confidence among investors and market analysts in the stability and resilience of the German stock market. The consistent upward trajectory of SAP’s stock price, a pivotal company for Germany’s primary market index, stands as a testament to this confidence. SAP, with its ongoing potential for growth, plays a significant role in influencing the direction of the DAX index.
Demonstrating a remarkable ability to withstand market corrections and moments of doubt, the German DAX index again showed its resilience, in contrast to the indices in the United States. On the Thursday before the Easter weekend, which is traditionally a period of lower trading volumes and potential volatility, the DAX remained focused on growth and impressively set a new record. While some U.S. indices were experiencing slight corrections at the beginning of the session, the DAX remained steadfast and continued to push towards record-high levels. This suggests that the DAX is increasingly being seen as a robust and reliable index by investors, especially in times of uncertainty.
TecDAX, another significant German stock index, mirrored the stability shown by DAX. Starting the day almost unchanged, it maintained a steady performance. Going into the long Easter weekend, which is often a quiet period for financial markets, TecDAX experienced a slight gain, ending with a 0.04 percent increase. This modest but positive performance indicates a stable market sentiment and underlines the resilience of technology-oriented companies within the TecDAX, even during typically subdued trading periods like holiday weekends.
The end of the financial quarter generally saw a boost in stock prices, driven by continued interest from investment funds in maintaining high allocations in equities, following a strong quarter start. Despite fears among market participants that short-term investors might start taking profits ahead of the long weekend, any selling pressure observed during Thursday's session was effectively offset by the ongoing investments from funds. This indicates a robust underlying confidence in the market, despite potential short-term profit-taking activities. The funds' ongoing investment strategies played a crucial role in sustaining market buoyancy, highlighting a broader trend of investor confidence in the stock market’s future.
Over the first quarter of the year, the DAX index saw an impressive gain of over 10 percent. This strong performance was echoed by the S&P 500, one of the major American stock indices. Notably, in recent times, the DAX has outperformed the S&P 500 in terms of relative strength, indicating a shift in investor preference or market dynamics. Since reaching its low in October, the DAX has surged by more than 26 percent. This significant growth highlights the strong recovery and upward momentum of the German stock market, marking it as an attractive option for investors looking for robust growth opportunities.
A key driving force behind the DAX index’s strong performance is the growth generated by SAP, one of its major constituent companies. The stock of SAP, a large German software corporation, is highly favored by market analysts. An overwhelming majority of expert opinions from FactSet suggest buying SAP shares, with nine out of eleven analysts recommending a buy, and only two advocating for holding the shares. There are currently no recommendations to sell. The target prices set by these experts for the DAX index vary between 159.00 and 205.00 euros, while the average target price for SAP shares is around 184.50 euros. This overwhelming confidence in SAP from financial experts reflects the company’s strong market position and its significant impact on the overall performance of the DAX index.
As of the last trading session before Easter, SAP’s stock closed at 180.56 euros per share. Looking deeper into the company’s performance, a key factor contributing to the rise in SAP’s share price in January was the release of its full-year data for 2023. SAP reported a revenue of 31.2 billion euros, which is 6 percent higher than the previous year. Moreover, its adjusted operating profit increased by 9 percent to 8.7 billion euros. The net profit saw a remarkable rise to 5.9 billion euros, more than tripling from the 2022 financial year. These figures not only demonstrate SAP’s robust financial health but also its ability to sustain growth and profitability, making it a standout performer in the DAX index.
Deutsche Presse-Agentur reports that SAP has particularly benefited from its strong performance in the cloud sector last year. This sector is increasingly lucrative, especially as SAP transitions to a subscription model, which, in the long term, is expected to generate higher total revenues compared to the traditional one-time fee model. SAP is also focusing on expanding its cloud business by adding additional services, particularly in the field of artificial intelligence (AI), as highlighted by CEO Christian Klein. This strategic direction not only strengthens SAP’s market position but also indicates the company’s commitment to staying at the forefront of technological innovation.
SAP’s strong market performance and solid financial standing have been recognized by major rating agencies. Recently, Moody’s upgraded SAP's rating from A2 to A1, reflecting a positive outlook on the company’s creditworthiness and its ability to meet financial commitments. This upgrade is a significant endorsement of SAP’s financial health and business strategy.
The DAX index remains in pursuit of record highs, trading just below its current peak of over 18,500 points. Investors, especially those using derivative instruments in Stuttgart, attempted to exploit the index's temporary hesitations to increase short positions, which indicates active trading strategies and investor engagement with the market. However, the index showed relentless progress, indicating strong underlying market sentiment. Despite a predominantly negative trend in the options market during the Friday session, the DAX’s overall trajectory points to robust investor confidence and a bullish outlook for the German market.
31.03.2024
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