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Dax Retreats as Pharma Stocks Gain Post-Trade Deal
At a glance
- •Dax rose 0.6% initially due to EU-US tariff agreement.
- •15% tariff on EU imports including cars and pharmaceuticals.
- •Sartorius and Merck KGaA saw significant stock gains.
- •The agreement alleviates concerns about trade barriers.
- •Potential for future tariff reductions on more products.
Market Analysis
The German stock market opened on a positive note as investors responded with relief to a new tariff agreement between the European Union and the United States. The Dax, Germany's leading index, saw an initial rise of 0.6%, reaching 24,361 points in the first hour of trading on Monday, although it started the day above 24,450 points. The breakthrough came as the EU and the US agreed on a basic tariff rate of 15% for most EU imports, including cars, semiconductors, and pharmaceutical products. This agreement also lays the groundwork for future tariff reductions on additional goods. Investors had been anticipating this development, especially after the US reached a similar agreement with Japan recently. As the trading house CMC Markets noted, speculations about a trade deal between the US and the EU have paid off, averting a no-deal scenario that could have triggered a downward trend.
Pharmaceutical Stocks in the Spotlight
Following the tariff agreement, pharmaceutical stocks emerged as some of the biggest winners on Monday. Analyst Richard Vosser from JPMorgan commented that the deal alleviated concerns about tariff burdens, particularly benefiting the German lab and pharma supplier Sartorius. Sartorius shares rose to lead the Dax with a 2.4% gain, followed closely by Merck KGaA, which climbed 2%. Sartorius also benefited from an upgrade by Bernstein Research from "Market-Perform" to "Outperform." Bernstein analyst Florent Cespedes remarked that the 15% tariffs represent a manageable risk for pharmaceutical companies, a factor already reflected in their valuations. The recent trade agreement marks a significant step towards reducing economic friction between two major global economies. It offers a sense of stability and certainty to markets that had been apprehensive about potential trade barriers. As the trading day progresses, investors will remain focused on how these developments might influence other sectors and individual stock performances, keeping a close watch on further announcements and market reactions.
