DAX Climbs Higher on Stronger Defense Spending – AI and Semiconductor Sector weigh
The leader of the CDU party stated his intention of approving a large increase in defense spending giving sector stocks a boost.
- Talk of €200 billion in defense spending
- US semiconductor restrictions weigh on DAX
- Merz retreats on pre-election pledges
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The DAX gained 0.65% this morning as talk of extra defense spending boosted sector stocks. While semi-conductor and AI stocks take a beating on US restrictions on semi-conductors.
Extra Defense Spending Paves the Way Higher
The DAX gained extra momentum this morning as the future chancellor opened up the idea of spending €200 billion in defense to modernize the German military.
Stocks such as Renk, Rheinmetall and Hensoldt are up 6.5%, 2.6% and 3.3% on the day respectively.
The military industrial complex creates spinoff business for various sectors, one stock to profit is Thyssenkrupp, up 14% on the day.
Today’s comments come after a number of main European leaders have committed to increasing defense spending. The comments came after Trump urged Europe to do more to maintain its own defense capabilities.
DAX Live Chart
Semi-Conductor Sector Comes Under Pressure
Overnight Bloomberg report that the US administration is looking for ways to restrict semi-conductor technology going to China.
The news created a sell of in Chinese semi-conductor stocks, and the reverberations have been felt in Europe also.
Infineon stocks, a semi-conductor maker, dropped 1.7% today as concerns of what such might mean crossed the Atlantic.
The AI sector also felt some spinoff from the news, with Siemens Energy, with a high level of involvement in the sector, which fell 2.2%.
Investors Waiting to See Coalition
The DAX also got some momentum from the comments from CDU leader Merz, who stated that immigration may not be an important part of the new government’s agenda.
These comments are in strong contrast to the campaign promises of a tough stance on illegal immigration.
But the words mean that a coalition with the socialist and green parties is more likely. Leaving the door open to possible reforms in investment, which are greatly needed.
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