The German stock market (GER 30) has continued its strong recovery and has hit new highs. However, some slowing momentum in the MACD indicator is a warning.
The price of the GER 30 now trades at 24,040 after a slump to as low as 19,000 in April. The push to new highs has occurred alongside a declining MACD indicator which would raise caution.
The German stock market continues to move strongly despite a weak economy.
Recent data showed German wage growth has eased significantly, and economic weakness suggests future bonuses will likely be much lower than in the past, according to the Bundesbank.
First-quarter negotiated wages rose just 0.9% from a year ago, compared to a 5.8% gain at the end of 2024, according to the central bank’s report.
Germany’s economy is expected to stagnate this year as the country faces headwinds from Donald Trump’s tariffs and trade threats, the government’s panel of economic advisers said Wednesday.
Germany has Europe’s largest economy, but hasn’t seen significant economic growth in five years, and gross domestic product shrank in each of the last two years. The panel, in its first forecast since new Chancellor Friedrich Merz took office earlier this month, predicted the economy will stagnate before 1% growth in 2026. A previous forecast in November predicted 0.4% growth this year.
The new outlook is similar to the forecast made a month ago by Germany’s former government. Merz, who took office on May 6, has announced plans to cut bureaucracy, advance digitization, provide tax breaks for companies and promote more free trade agreements.
“Trump’s tariff policy is increasing uncertainty and endangering economic growth worldwide,” said Monika Schnitzer, the head of the panel. But she added that a huge investment package offered by Merz’s coalition “offers opportunities for a modernization of infrastructure in Germany and a return to a higher path of growth”.
Traders can still find some dip buying momentum in the GER 30 but should be wary of any change in sentiment from news headlines that could create another pullback.
