German DAX Hits Record 23000 Amid EU Defence Spending

The German DAX closed at 23009 on March 9 after hitting a record 23000 after the EU decided to ease the fiscal rules for defence spending.

On March 8, the EU agreed to bolster the bloc’s defence spending. As such, it proposed to mobilize €800 billion in special funds.

It also called for additional funding sources, which may include a commitment to spend 3% or more of GDP on defence without triggering the debt & deficit limits set by the commission.

German Government’s Fiscal Stimulus Push DAX to 23000

The EU’s plan supports Germany’s recent push to relax its fiscal policy, or the “debt brake,” to increase defence spending and investment in the wider economy.

The new German government, led by Chancellor Friedrich Merz, announced a €500 billion investment package targeting infrastructure and defence.

This expansionary fiscal policy has boosted market confidence and fueled investor optimism, driving the German DAX to a record high of 23,000.

Germany grappled with fiscal constraints over the past decade, maintaining strict spending discipline following Europe’s sovereign debt crisis in 2009.

Read: Germany’s DAX Index Hits Record High of 22000 Points

Other Reasons DAX Hits a New High

US President Donald Trump’s decision to delay auto tariffs on Mexico and Canada boosted German car manufacturers.

Also, the US unemployment rate, which surged to 4.1%, and concerns over new tariffs weakened the dollar and the Euro.

Furthermore, the European Central Bank decision aided the German DAX. On March 6, the ECB slashed interest rates by 25 basis points to 2.5% amid lower inflation, weak Eurozone growth, and trade & geopolitical uncertainty. Investors viewed the rate cut as a sign of looser financial conditions, boosting the DAX.

Impact of DAX Record 23000 on German Sectors

Sectors Benefiting the Most

• Financials (Deutsche Bank, Allianz): Higher market confidence leads to more lending & asset growth.
• Technology (SAP, Infineon): Stronger investor appetite for German tech innovation & AI.
• Industrial & Energy (Siemens, RWE, BASF): Higher demand for infrastructure projects.

Potential Losers

• Automotive (Volkswagen, BMW, Mercedes-Benz): Stronger Euro hurts export sales.
• Consumer Goods (Adidas, Henkel): A stronger Euro could slow international revenue growth.