The DAX recorded an impressive performance in the first half of 2025, rising by around 22 percent since the beginning of the year. This outperformed other major indices like the Euro Stoxx 50 and the S&P 500. This strong development is mainly attributed to two key factors.
Government Spending and Trade Optimism as Drivers
A significant factor for the German stock market boom is the massive expansion of government spending in Germany. Particularly noteworthy are investments in defense and infrastructure sectors. At the same time, there is a optimism about a forthcoming agreement in the transatlantic trade dispute, which further encourages investors.
Analyst Sören Hettler from DZ Bank emphasizes that these government investments particularly benefit utilities, financials, and industrial companies. Additionally, investors’ interest in seeking alternatives to the US dollar is increasing, which benefits the European economy.
The Big Winners: Defense Stocks
Particular beneficiaries of this development, according to reports, are the DAX companies Hensoldt, Renk, and Rheinmetall. These companies operate in the defense sector, which has further growth potential due to rising government spending.
Furthermore, other top German companies such as the energy giant RWE, the chip manufacturer Infineon, as well as Bayer and Puma are considered attractive investments. Experts recommend investing in a broadly diversified mix of sectors and possibly using ETFs to spread the risk.
Opportunities and Risks for Investors
For private investors, the German stock market currently offers excellent opportunities. Investing in the fields of defense, energy, and technology could be rewarding. However, investors should pursue a balanced strategy, as risks such as political uncertainties in the USA or potential slowdowns in growth remain.
In short: The record investment boom in Germany is driving stock prices, particularly for companies like Hensoldt, Renk, and Rheinmetall, upwards. Now is a good opportunity to invest in German assets.