German Stocks Decline Amid AI Concerns and Tariff Threats

German stocks are under pressure as the technology sector suffers due to concerns over earnings, particularly following the rise of DeepSeek. Investors remain cautious about growth and international trade amid looming tariff threats from President Trump.

Date: 27-01-2025

AI Rating: 5

Market Overview: German stocks are notably declining, particularly within the technology sector, as concerns regarding earnings emerge following Chinese startup DeepSeek's establishment as a formidable AI model. This trend is exacerbated by investor anxiety regarding upcoming policy announcements from the Federal Reserve and the European Central Bank, alongside fears surrounding growth and international trade linked to U.S. tariffs.

Sector Performance: The DAX 30 index fell to 21,171.18, reflecting a decrease of approximately 1%. Siemens Energy suffered a significant decline of 17%, which is noteworthy as the company supplies electric hardware necessary for AI infrastructure. Infineon also faced a decline, dropping 4.4%, along with Siemens (-4%), Rheinmetall (-3%), and SAP (-1.6%). Conversely, several companies, including Volkswagen, Allianz, and Bayer, observed minor increases in their stock prices ranging from 1% to 2%.

Economic Indicators: A report from the Ifo Institute indicated a minor increase in Germany's business climate indicator to 85.1 in January from 84.7 the prior month. The current conditions index rose to 86.1, surpassing expectations of 85.4, although the sub-index for business expectations slightly decreased to 84.2.

Despite the minor improvements in some economic indicators, the ongoing stagnation in Germany's economy remains a concern for investors. This situation could affect future earnings and overall market confidence, leading to fluctuations in stock performances.

Stocks: SAP VOW3 BAYN ENR