The German DAX index continues to rise, with expectations of interest rate cuts boosting confidence in European stocks

Frankfurt, May 21, 2025——
The German DAX 40 index rose 1.1% on Wednesday, closing at 19860 points, marking its fourth consecutive day of gains and setting a new historical high. The market expectation that the European Central Bank may start lowering interest rates in June has injected significant momentum into the eurozone stock market, especially in the interest rate sensitive banking and technology sectors.

The latest data released by the European Statistical Office shows that the consumer price index (CPI) in the Eurozone increased by 2.4% year-on-year in April, a decrease of 0.3 percentage points from the previous month and the lowest in nearly two years. Core inflation has also experienced a substantial decline, leading the market to generally bet that the tightening cycle has ended.

Deutsche Bank released a report stating that "the structural decline in inflation has opened up space for the European Central Bank to shift policy. We expect a 25 basis point interest rate cut in June and may cut rates again within the year." As a result, Deutsche Bank's stock price rose by 2.6%, while industrial giant Siemens and software giant SAP rose by 2.3% and 2.1% respectively.

Although the growth momentum of the European economy is still insufficient, the prospect of policy easing and profit recovery expectations are reshaping investor confidence. The market liquidity is gradually improving, and foreign investment continues to flow back into the European equity market. The DAX index is expected to further challenge the key psychological level of 20000 points.

Analysts point out that if the European Central Bank can moderately and orderly promote monetary easing while maintaining exchange rate stability, it will provide a good medium-term allocation opportunity for European stocks, especially blue chip stocks with attractive valuations.