Since the inauguration of US President Donald Trump, there has been no stopping the DAX: at the end of the week, the leading German index, which had just broken through the 21,000-point mark on Monday, climbed 0.5 percent to a fresh record high of 21,520.50 points.

Since the beginning of the year, the gain has already amounted to a good eight percent. "The Dax is out of control," stated Jürgen Molnar from RoboMarkets. The Trump euphoria is driving share prices. Most recently, Trump's call for low interest rates and his softer tone on punitive tariffs put investors in a buying mood. The EuroStoxx50 reached a 24-year high on Friday. The dollar, on the other hand, fell sharply.

"With the announcement that he may waive tariffs against China, the US president ignited the next stage of the current price fireworks," said Thomas Altmann from asset manager QC Partners, referring to the rally on the stock market. Donald Trump, who was sworn in at the beginning of the week, said in an interview with Fox News that his most recent conversation with his Chinese counterpart Xi Jinping was "friendly" and that he could reach an agreement in the trade dispute with China. He would prefer not to impose tariffs on China.

TARIFF HOPES MAKE CAR STOCKS COVETED

Hopes that major trade conflicts could be averted prompted investors to buy car stocks in particular. On the DAX, Porsche, Mercedes-Benz, BMW and Volkswagen shares gained between 3.1 and 2.5 percent. The European car index rose by 2.4 percent at its peak. The issue of tariffs was a core element of Trump's election agenda with regard to China, the EU, Canada and Mexico. The shares of European car manufacturers in particular had plummeted in recent months due to the tariff threats. So far, however, the new US president has refrained from making any concrete announcements regarding trade policy. Nevertheless, many experts see no reason to sound the all-clear. "Tariffs will come - it's just a question of how and when," says Mark Dowding from RBC BlueBay Asset Management.

While equity investors rejoiced, the US currency took a beating. The dollar index fell by up to 0.7 percent to a five-week low of 107.2760 points. Over the week as a whole, it fell by around 1.5 percent. The euro, on the other hand, temporarily rose by one percent to 1.0514 dollars. At the World Economic Forum in Davos, Trump called for the US Federal Reserve to cut interest rates. "However, the Fed will hardly give in to this request when it decides on interest rates next week," predicts Carsten Mumm, Chief Economist at private bank Donner & Reuschel. "Market expectations clearly suggest that the central bank will adopt a wait-and-see approach." The growth momentum of the US economy and thus also the inflationary pressure are too strong.

WEAK DOLLAR BOOSTS COMMODITY PRICES

Copper and gold were in demand on the commodities market due to the weak dollar. Commodities traded in the US currency are therefore cheaper for holders of other currencies. Gold rose in price by up to 0.9% to 2777.97 dollars per troy ounce, just below the record high of 2790.15 dollars reached at the end of October. The price of copper climbed by 1.3 percent to 9355 dollars per ton.

Among the individual stocks, luxury stocks stood out alongside the automotive sector. Shares in Burberry soared 14 percent after better-than-expected business figures, dragging other luxury brands up with them. The shares of Gucci owner Kering gained 8.4 percent, while those of LVMH and Cartier owner Richemont rose by 2.8 percent each. Hugo Boss traded 3.5 percent higher in the MDax. After a long period in the doldrums, investors were once again hopeful of a revival in the luxury goods sector.

The imminent merger on the Italian banking market was also a topic of conversation. The traditional bank Monte dei Paschi di Siena (MPS), which was rescued from bankruptcy with state aid, wants to swallow up the larger Mediobanca for 13.3 billion euros and is offering a share swap in return. Mediobanca shares climbed 6.9 percent to 16.34 euros, their highest level in almost 18 years. Shares in Monte dei Paschi, on the other hand, slipped by more than ten percent at times. "We believe that the synergy potential is limited," said a commentary by the broker Keefe, Bruyette & Woods (KBW).

(Report by: Daniela Pegna, assistance Anika Ross, edited by Sabine Ehrhardt. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)