Investors are cashing in on the strong performance of the German stock market, which has recently shown a remarkable rally. On March 20, 2025, the DAX, already seeing signs of weakness the previous day, surrendered to profit-taking, marking a notable decline in its index value.
The DAX slipped significantly, down by 1.36 percent to 22,971 points, which indicates a substantial drop from its peak of 23,476 points, translating to over 600 points lost. At times during the trading session, the index had suffered losses as high as two percent, reflecting a growing hesitation among investors to push prices higher following earlier gains this year.
The mid-cap index MDAX also faced adversity, suffering a larger decline of 2.33 percent to 28,955 points, while the Euro Stoxx 50 followed suit, dipping by one percent. Analyst Christian Henke from IG pointed out that the market is currently refocusing on the implications of US President Donald Trump's trade policies, as this uncertainty looms over investor confidence.
The Federal Reserve’s recent announcement of keeping the key interest rates unchanged did little to bolster investor optimism. Analyst Tiffany Wilding from Pimco emphasized the necessity of finding a balance between rising inflation and increasing recession risks, reflecting a significant shift in trade policy expectations.
Among the notable companies reporting their earnings, RWE saw its stock price decrease nearly four percent. This decline was attributed to a mixed outlook, despite solid annual results that had initially buoyed the company’s stock price. In a broader context, Rheinmetall emerged as the biggest loser in the DAX, primarily due to ongoing profit-taking across the armaments sector.
Deutsche Bank and Commerzbank experienced price losses ranging up to five percent. Both banks had previously enjoyed substantial share price increases, with Commerzbank soaring by as much as 60 percent earlier in the year. Analyst Jason Napier from UBS provided insight into the banks' recent strength, noting that the past earnings reporting season had been one of the best in recent memory, alongside reduced anxieties regarding declining benchmark interest rates in the Eurozone.
In contrast, SAP shares saw a slight uptick of 0.4 percent after JPMorgan awarded the software company the "Positive Catalyst Watch" status, highlighting potential positive drivers for this stock.
RTL stocks came under pressure as well, dropping by 7.7 percent. Analyst Annick Maas from Bernstein acknowledged the media company’s encouraging streaming business revenues while predicting yet another weak year for its production unit, Fremantle.
Lanxess also faced tough trading conditions, seeing an eight percent decrease due to a disappointing forecast that fueled investor concerns. Chetan Udeshi from JPMorgan highlighted that the outlook lacked signs of a typical seasonal uptick in the first quarter, igniting fears of a slowing recovery.
The SDAX index faced the brunt of losses with SGL suffering a significant 16 percent slump in its stock price, caused by a lackluster outlook projecting both revenue and profit declines. This steep drop wiped out all the stock gains since mid-February, leading it below the three-week moving average.
Profit-taking was apparent in the armament sector as well, contributing to a sharper drop for Deutz stocks, which saw a 13 percent decrease. The engine manufacturer had drawn heightened expectations, now dissipating rapidly according to the sentiment reflected by market analysts.
The situation on the German stock market presents a complex picture as investor sentiment shifts amid rising global uncertainties. While some stocks like SAP manage to find small gains due to favorable outlooks, others face steep declines as profit-taking becomes prevalent after an impressive rally. With ongoing economic signals emerging from both sides of the Atlantic and concerns regarding future trading policies, investors are poised for a cautious yet vigilant approach in the upcoming sessions.
