A vote of confidence yes, or no? USA and China more important for DAX
A government situation that the Federal Republic of Germany has never experienced before in its history, even though it is the strongest country in the European Union in economic terms. Amid geopolitical crises and economic difficulties, the country is reeling, revealing a government that is idealistically pursuing its values and has lost sight of the big picture. The DAX appears to be controlled by others; the index barely reacts to domestic political squabbles, even when it comes to economic plans. Investors are much more interested in how economic relations between the USA, China and the EU will develop. The first doubts are being voiced that the Chinese economic stimulus program vis-à-vis a new administration led by President-elect Trump will not be sufficient to compensate for the massive regulations expected from the US side and at the same time further boost growth in the Chinese economy.
Can China maintain its growth?
This in turn is a key growth factor for many DAX companies, as the integration of DAX companies in the Chinese economy is immense and a key success factor. At the same time, the European Union is also using tariffs to make it more difficult for the Chinese economy to enter the European domestic market with its cheap e-cars. This in turn also leads to restrictions on European exports to China. The framework conditions, which will be rewritten in the coming months, will have an impact on the stock markets, as they will also directly influence company sales and therefore results.
BASF continues to have problems
On Friday, the DAX fell again by 0.76% after a positive Thursday and closed at 19,215 points. BASF shares felt the effects of a renewed stalling of Chinese growth. The share closed 5 percent, bringing up the rear of the DAX list. Shares in the automotive sector, which also have a strong foothold in China, also suffered heavy losses. Daimler Truck, down 4 percent, and BMW, down 3.2 percent, are also already trembling in the face of new regulations.
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