The DAX index performed excellently in the beginning of this year as global stocks made a strong comeback. It increased by more than 26%, hitting a record high of €18,477. Lately, the index has risen over the past eight consecutive weeks.

This growth occurred despite serious concerns about the German economy entering a recession in the fourth quarter of the previous year. The economy is expected to be the weakest among the G7 nations this year. Liquidity has also become a significant issue in Germany as interest rates have risen to historic highs.

The surge in the DAX index is driven by optimism that the ECB and other central banks will lower rates later this year, with expectations of about three cuts in 2024. Additionally, European stocks are seen as better value compared to American stocks, with the S&P 500 index having a price-to-earnings ratio of 24, while the DAX index has a multiple of 18.6.

Rheinmetall, Siemens Energy, and Daimler Truck stocks were among the top performers in the first quarter. Rheinmetall, a major defense contractor, saw its stock surge by over 78% due to increased demand for weapons. Its sales grew by 12% in 2023, reaching over €7.1 billion, and it raised its dividend to €5.70 per share.

Siemens Energy's stock increased by more than 37% after receiving funding from the German government, avoiding bankruptcy. Daimler Truck stocks rose by over 36% this year as demand for trucks increased. Other successful DAX index companies include Heidelbergcement, Zalando, Airbus, and Munich Re.

On the other hand, some companies like RWE, Infineon, Bayer, and Continental have underperformed in the DAX index this year. RWE, a major German energy company, experienced the largest decline, dropping by over 23%.