Is the DAX taking off signal here? Three key points investors must watch in 2025

Honestly, the performance of the DAX in 2024 has made many investors very happy. This flagship index of the German stock market broke through the 20,000-point mark in one go, creating a new all-time high. But here’s the question—can this rally continue? What will the upcoming DAX prognose nächste woche and subsequent trend look like?

2024: The Year of DAX Celebration

Let’s first review: in 2024, the DAX rose nearly 20%, with a cumulative increase of over 3,000 points. This rally even surprised some analysts. Why so strong? Several key factors:

First, China released a lot of positive economic data, boosting global markets. Second, the European Central Bank and the Federal Reserve started cutting interest rates—this is a bullish signal for stock investors—because rate cuts make stocks more attractive compared to bonds, and corporate financing costs decrease. Third, there’s the traditional year-end “Santa Claus rally,” prompting investors to avoid missing out on gains.

As a result, one historic high after another was set.

2025: Risks and Opportunities Coexist

But looking ahead, the situation isn’t so simple.

Political and trade risks are the top concerns. The Federal Parliament election on February 23 will trigger a market wait-and-see period. After the new government takes office, it will take time to formulate economic policies, during which the market might experience some pullback. Larger risks come from Trump’s tariff threats—if tariffs are really imposed on EU goods, Germany, as a major export country, will be hit hard. Especially those export-oriented companies that dominate the DAX, their days could be tough.

Economists estimate that if the US imposes a 20% tariff on EU goods and a 60% tariff on Chinese goods, Germany’s exports to the US could decline by 15%. This would put pressure on DAX component stocks.

However, in the short term, the 2025 DAX prognose remains optimistic. The index is expected to fluctuate between 18,000 and 20,000 points, assuming global economic stability and reduced geopolitical risks. But beware—decisions like the European Central Bank’s rate cuts and slowing German economic growth could trigger volatility.

2025-2030: How High Can It Go?

From a medium- to long-term perspective, it depends on Germany’s position in the global economy.

Good news is, the DAX index has a structural advantage: it is a performance index that automatically reinvests dividends. This means you can benefit not only from stock appreciation but also from compound interest. And look at the companies inside—SAP, Siemens, Allianz—these are major players with strong global competitiveness. Especially SAP, which alone accounts for 10% of the DAX.

Key forecasts:

Conservatively, if the DAX grows an average of 6% annually, it could reach 25,200 points by 2030. More aggressive analysts say that with a 9% annual growth rate, it could break 30,000 points by 2030, and even reach 100,000 by 2040.

But honestly, such long-term forecasts are full of uncertainties—you need to decide which one to believe.

Three Stocks to Watch (2025 Focus)

There are three DAX stocks worth paying close attention to:

1. Daimler Trucks
This heavy truck manufacturer meets all screening criteria: analysts give a “strong buy” rating, with a potential upside of at least 20%. Benefiting from global logistics demand and electrification trends.

2. RWE
An energy company, perfectly positioned at the intersection of energy transition and infrastructure investment. As electrification advances, the long-term prospects for such companies look good.

3. Merck
A pharmaceutical giant with stable business and growth potential.

Additionally, Heidelberg Materials (building materials), SAP (software), and Deutsche Börse (exchanges) are also optimistic bets that could hit new highs in 2025.

How to Invest?

Short-term (2025):

• ETF is the easiest: Buy a DAX index fund directly, holding all 40 companies at once, for diversified risk. The downside is that returns are average.
• Active funds offer opportunities: Find professional fund managers to pick stocks, potentially outperforming the index, but management fees are higher and success isn’t guaranteed.
• Stock picking: Directly buy leaders like Siemens, BMW, SAP—riskier but with higher potential returns if you pick right.

Long-term (2025-2030+):

A diversified portfolio strategy is the most prudent. Use a DAX ETF as core holding (stability), mix in some global index funds (like MSCI World for diversification), and add some growth ETFs (tech, infrastructure). This way, you benefit from Germany’s economic growth without over-reliance on DAX alone.

Large fund providers like iShares and Xtrackers offer low-cost DAX ETFs suitable for long-term holding.

Risk Management: Don’t Put All Eggs in One Basket

A key tip: Don’t put all your eggs in one basket.

Although the DAX’s component count has increased from 30 to 40, it’s still quite concentrated. A few large companies have very high weights, so sector swings can impact the whole index. The best approach is:

• DAX investment accounts for 60-70% of your stock portfolio
• Global indices 20-30%
• Bonds, commodities, and other assets 10%

Set stop-loss and take-profit points carefully. For example, sell a stock if it drops 10%, take partial profits if it rises 30%. This helps avoid emotional decisions and foolish moves.

Final Words

The DAX’s surge in 2024 has already become a reality. But what about the 2025 DAX prognose? The answer: there’s potential, but caution is needed.

In the short term, political uncertainty and trade risks cast shadows. But from a three- to five-year perspective, Germany’s corporate competitiveness, the DAX’s structural advantages, and global recovery potential all point toward continued growth. It’s reasonable to expect the DAX to reach 26,000–30,000 points between 2025 and 2030.

Most importantly, choose your investment approach based on your risk tolerance. Those seeking explosive gains in the short term can focus on the three key stocks, while conservative investors can simply buy ETFs and dollar-cost average. Manage your risks—set stop-loss and take-profit points—and don’t wait to be caught in a trap.

The opportunities in the DAX are still there, but opportunities always favor those who are prepared.