Germany's DAX Trims Gains as Manufacturing Data Triggers Caution

Germany’s DAX index trimmed its early momentum on Friday, though remained in positive terrain as traders navigated mixed signals from economic data and geopolitical considerations. The benchmark climbed as high as 24,691.11 during the session before paring back to 24,518.61, reflecting a modest gain of 28.20 points or 0.12%.

Defense and Auto Sectors Lead Market Sentiment

The market’s strength was predominantly anchored by defensive positioning and automotive strength. MTU Aero Engines and RWE emerged as the session’s top performers, advancing 2.3% and 2.2% respectively, benefiting from ongoing geopolitical tensions and expectations for increased military expenditure. The defense narrative extended to other cyclical players, with Rheinmetall, Siemens Energy, Bayer, and BMW posting gains in the 1% to 1.5% range. Volkswagen climbed 1.7%, while Mercedes-Benz similarly moved higher alongside other heavyweight contributors to the benchmark.

Manufacturing Contraction Tempers Optimism

A significant headwind emerged from Germany’s manufacturing sector data. The HCOB Germany Manufacturing PMI contracted to 47 in December, down from 48.2 in November and undershooting the preliminary forecast of 47.7, marking the most pronounced decline in manufacturing activity over the past ten months. This deterioration in industrial conditions weighed on market sentiment and contributed to the DAX’s inability to sustain its opening strength.

Sectoral Divergence Reflects Market Uncertainty

Beyond the gainers, a divergent picture emerged across the broader index. Midcap performers including Infineon, GEA Group, Deutsche Telekom, E.ON, and Scout24 notched moderate advances, while defensive healthcare and dividend-oriented names stumbled. Vonovia, Qiagen, Hannover Rueck, and Fresenius Medical Care slipped 1 to 1.5% lower. Munich RE, Daimler Truck Holding, Siemens Healthineers, and Symrise also concluded the session in negative territory, reflecting profit-taking and sector rotation.

The trading resumption followed Wednesday and Thursday’s market closure, with investors recalibrating positioning against the backdrop of slowing industrial momentum and persistent geopolitical risk premiums weighing on European equities.