German equities advanced at the start of the week, building on gains recorded in the previous session. The benchmark DAX index finished Monday up 0.76 percent at 25,277.68 points, moving further away from the 25,000-point threshold breached several times the prior week. However, the downward-sloping 21-day moving line remained an immediate hurdle for the short-term trend. Meanwhile, the mid-cap MDAX index added 0.38 percent to close at 30,104.33 points.
Market expert Andreas Lipkow from CMC Markets warned that the recent easing in stock prices rests on fragile foundations, pointing to financing concerns surrounding artificial intelligence investments, elevated government bond yields, and high energy costs. Oil prices recovered later in the session after earlier losses, while investor sentiment received a boost from comments by Chancellor Friedrich Merz in favor of lowering the electricity tax.
Timo Emden, a market analyst at CapTrader, described the ongoing fluctuations as a persistent tug-of-war between buyers and sellers. He noted that the upcoming earnings season could serve as a primary near-term driver for equity markets and overshadow latent risks, with several major United States banks scheduled to kick off third-quarter reporting.
In New York, the Dow Jones Industrial average rose roughly half a percent by European closing time. US trading volumes remained lighter than usual due to the Columbus Day holiday, which also kept the US bond market closed. Across the eurozone, the EuroStoxx 50 gained 0.45 percent to 6,201.21 points, while Switzerland's SMI and Britain's FTSE 100 also registered increases.
Defense stocks drew strong buying interest among individual German equities. Rheinmetall led the DAX with a 2.5 percent gain, while Renk, TKMS, and Hensoldt rose between 1.9 percent and 5.8 percent in the MDAX. Morgan Stanley adopted a more optimistic stance on the sector's prospects, stating that an end-of-year rally is entirely possible alongside stronger investor confidence regarding 2027 targets.
MDAX shares of Nordex also attracted demand, climbing 3.9 percent. The wind turbine manufacturer reported a substantial surge in third-quarter order intake compared to the prior year. Schaeffler shares advanced 1.2 percent following progress on job reductions; the automotive and industrial supplier stated it had already eliminated a major share of targeted positions by the end of September, allowing the restructuring to conclude ahead of schedule and resulting in higher-than-expected cost savings and released provisions.
Conversely, Aroundtown shares dropped 5.7 percent to the bottom of the MDAX after Goldman Sachs downgraded the real estate company's stock to sell, citing higher financing costs that are projected to depress earnings per share through 2028. Flatexdegiro shares fell 1.9 percent after Deutsche Bank Research removed its buy rating, citing slowing customer growth, normalizing user trading activity, and rising customer acquisition costs driven by intensifying competition. Outside the primary indices, Procredit gained 1.2 percent and is scheduled to enter the small-cap index, replacing Nagarro following the near-complete takeover of the IT services provider by Persistent.
