DAX Stalls at Key Level as SAP Plunge Offsets Geopolitical Relief

Germany's DAX ended flat in volatile trade as a 6.4% crash in heavyweight SAP erased early gains from soft US inflation data. Technicals signal overbought conditions.

A volatile Friday session left Germany's benchmark index virtually unchanged, caught between conflicting forces. Early gains fueled by softer US inflation data and hopes for Middle East de-escalation were completely erased by a dramatic sell-off in index heavyweight SAP and disappointing industrial figures.

The DAX opened near 23,900 points and briefly climbed to a daily high of 24,047. The rally proved short-lived. By early afternoon, the index had plunged to a low of 23,706 points before a slight recovery set in. It ultimately closed with a marginal loss of 0.01 percent at 23,803 points. This consolidation followed a strong weekly gain of approximately 2.7 percent.

The dramatic reversal was primarily driven by SAP, whose shares plummeted as much as 7 percent. Comments from CEO Christian Klein warning of "short-term pain" during the company's ongoing AI transformation sent the stock to its lowest level since January 2024. Due to its substantial weighting, SAP's decline single-handedly dragged the entire market lower, shedding 6.4 percent by the close. The move highlighted the index's structural vulnerability to swings in its largest constituents.

Sector performance was a tale of clear winners and losers. The automotive sector provided additional headwinds. Porsche reported a 15 percent drop in first-quarter deliveries to around 61,000 vehicles, while Daimler Truck saw deliveries fall 9 percent. Volkswagen also halted US production of its ID.4 model due to weak demand. Defense giant Rheinmetall lost nearly 6 percent, pressured by de-escalation hopes in the Middle East and speculation about margin pressure on new major contracts.

On the positive side, BASF emerged as a top performer, gaining 3.1 percent. The chemical giant was buoyed by positive analyst commentary on its dividend yield and stabilizing natural gas prices. Other defensive names also held firm, with Continental advancing 2.35 percent and Adidas adding 1.40 percent following a reaffirmed buy recommendation from Citigroup.

The technical picture remains mixed. The DAX currently trades just below its 200-day moving average around 24,115 points, with the 24,000 level now acting as confirmed resistance. The Relative Strength Index (RSI) reading of 83.8 signals a deeply overbought condition, suggesting near-term consolidation pressure is likely. Chartists are now watching the support zone around 23,700 points; a break below could see the index test the next cushion near 23,500.

Looking ahead, investor focus shifts to the upcoming ZEW economic sentiment survey and further developments regarding the US-Iran ceasefire, reports of alleged violations of which contributed to Friday's afternoon weakness. The US earnings season also kicks off with reports from JPMorgan and Goldman Sachs, which typically influence European financial stocks. For the DAX's upward trend to resume, a stabilization in SAP's share price and a sustained move above the 24,000-point threshold will be crucial.