Germany Has an Edge in a Lower Oil Price World: Taking Stock

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The German stock market has a lot going for it right now, with lower oil prices and a broadening rally from software to chemicals and consumer stocks powering the country’s shares.

The German stock market has a lot going for it right now, with lower oil prices and a broadening rally from software to chemicals and consumer stocks powering the country’s shares.

After underperforming most European and benchmarks in 2026, the DAX has rallied 6% to a record high this quarter. Falling oil prices have done most of the heavy lifting, benefiting the energy-intensive firms that make up about a third of the index. The scare in the artificial intelligence trade has been a boon for software stocks such as S SE, which accounts for about 12% of the DAX’s weight.

“The DAX has benefited from its cyclical sector mix, particularly its high technology exposure, where the combination of software and hardware has provided some protection,” said Deutsche Bank AG strategist Carolin Raab. “The relatively low exposure to traditional energy and basic resources has also helped.”

The rally has been broadening fast, with about 80% of DAX members trading above their 200-day moving average and 18% making fresh 52-week highs just this week. Only the ultra-defensive Swiss SMI is seeing stronger momentum among major European benchmarks. In last month’s Bank of America Corp. fund manager survey, Germany was the second-most preferred market in Europe, with a net 16% of investors intending to overweight its stocks in the next year.

Bloomberg Intelligence strategists led by Laurent Douillet said local conditions have historically had little influence over the DAX, given that its members generate only 15% of sales domestically. That relationship now appears to be changing, with US and German PMIs becoming more significant at the expense of Chinese indicators. The strategists expect 16% forward 12-month earnings-per-share growth versus 13.4% consensus, supported by AI capital spending, higher defense outlays, financials and a recovery in Germany’s economy.

Germany’s fiscal stimulus has started to kick in, and UBS Group AG economists expects it to add about 60 basis points to economic…

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