FRANKFURT (DEUTSCHE-BOERSE AG) - Despite the ongoing stream of news, share prices are rising in the local market. The mood among medium-term-oriented domestic investors cannot keep pace, but this should be beneficial for the market.
July 9, 2025. Over the past few days, outsiders could well have gained the impression that events on the financial markets were playing out on two stages. On one stage, there were some pretty dramatic developments—the "tariff threat," a play in several acts written and starring Donald Trump. However, anyone who eagerly awaited the dénouement of the drama yesterday after the 90-day pause since the so-called Liberation Day will now have to wait until August 1. And then, according to Trump, the curtain will finally fall and clarity will reign regarding the threatened tariffs. At least the president has already announced that he will impose tariffs of 50 percent on copper and 200 percent on pharmaceuticals.
On the other "stage," where stock market prices are playing out, there seems to have been little reaction, at least in Germany, to the almost boring tariff drama. Since our last survey, the DAX has continued its upward trend at a moderate but steady pace after an initial slight setback, resulting in a 2.5 percent gain for the week. It seems that many stock market traders have already become accustomed to the possible negative effects of the trade tariffs because the whole story has been dragging on for so long, or reacted with relief because there was no "tariff letter" for the eurozone.
Hanging in there in the bear pit
However, only a small proportion of the institutional investors with a medium-term trading horizon that we surveyed appear to have benefited from the recent rise in the DAX. Our Frankfurt Stock Exchange Sentiment Index rose by just 4 points compared with the previous week to a new level of +4. The five percentage point increase among the bulls and the one percentage point increase among the bears are fed by investors who were previously neutral. In other words, the most recent pessimists from the previous week hardly reacted to the DAX rise and are now sitting on book losses.
In contrast, some of the pessimistic private investors have reacted to the DAX rise in a fairly disciplined manner. The Frankfurt Stock Exchange Sentiment Index rose by 5 points to a new level of +11 in this panel because the bear camp shrank by 5 percentage points and these pessimists joined the neutral investors.
Disciplined private investors
This development is primarily driven by those whom we do not survey via social media. Interestingly, the group of optimists has shrunk among the latter—on balance, the group of neutral private investors has grown by 5 percentage points.
Today's vote has done little to narrow the gap between institutional and private investors. However, it is striking that, in contrast to private investors, the proportion of neutral institutional investors has fallen by 6 percentage points compared with the previous week, meaning that both panels are now almost at the same level in this respect.
The optimism among institutional investors is now mainly attributable to players who were previously neutral, while the pessimists from the previous week have largely remained inactive. This group would probably be happy if the DAX fell back to 23,700/750 points – this is the level at which we expect initial demand in the event of a setback. On the other hand, however, optimism is not so high that we would expect significant resistance if the stock market barometer continues to rise. All in all, the sentiment-related situation for the DAX therefore remains favorable.
by Joachim Goldberg
July 9, 2025, © Goldberg & Goldberg for boerse-frankfurt.de
(Deutsche Borse AG is solely responsible for the content of this column. The articles do not constitute an invitation to buy or sell securities or other assets.)
