DAX the favoured cyclical recovery play?

Via Bloomberg

The surge in Volkswagen shares last week that helped German stocks higher underlines the DAX as a cyclical recovery play.

The DAX outperformed European stocks overall last week with the DAX edging ahead of the FTSE MIB. A large part of the rally has been as Volkswagen bids to rival Tesla in electric vehicles. Volkswagen overtook SAP as Germany’s most valuable public company. The slowdown in Germany remains as the vaccine rollouts are dogged by delay. Eventually, though, the recovery should come to Germany. That is of course with all the caveats that we currently have regarding how the variants will develop and the pandemic proceed.

Bloomberg survey puts DAX ahead of the European pack

On average the anticipated gain is 2% by the end of the year. This is slightly more than in February. Since the start of February the DAX’s 12 month forward price target percent change has moved ahead of other European peers. Check out the comparison below:

Via Bloomberg Today is not the best day to chase this as the reflation trade is having a wobble. Whether it is a deeper pullback in equities or not is uncertain, but there is a bit or re-orientation going on right now.

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