By Frank Walbaum, Market Analyst, Naga
July 23, 2025
The DAX rose on Wednesday, led by a strong performance in the auto sector after a trade agreement between the United States and Japan lifted investor sentiment. President Trump confirmed a new trade deal with Japan involving a 15% tariff on Japanese exports and substantial investment commitments from Tokyo into the US.
The deal raised hopes that Washington could show flexibility in ongoing talks with the European Union. EU negotiators are seeking a compromise before the August 1 deadline for broad U.S. tariff implementation.
Gains were concentrated in the automotive sector, with shares of carmakers rising on optimism that similar concessions could benefit EU manufacturers. Europe exported nearly 758,000 vehicles to the US last year, highlighting the stakes for the industry.
However, the rally was tempered by a notable decline in SAP shares. Despite delivering a sharp rise in free cash flow and strong Q2 profit growth, the German software giant held off on raising its full-year guidance, disappointing market expectations.
Looking ahead, investors are focused on upcoming earnings from several major German corporates including Deutsche Bank, Deutsche Börse, Volkswagen, and MTU Aero Engines. While weaker results may weigh on sentiment, optimism around trade diplomacy may continue to underpin market resilience. Additionally, attention also turns to ECB’s policy meeting on Thursday.