From Defense to Chips: DAX Rebounds as Sector Rotation Accelerates
Published on 06/25/2026 at 13:06 | Redaktion boerse-global.de
The German stock market staged a sharp reversal on Thursday morning, with the DAX climbing 0.60 percent to 24,889.80 points as investors pivoted away from battered defense stocks into semiconductor plays. The shift came just 24 hours after Rheinmetall’s worst single-day rout in history had wiped out nearly a fifth of its market value and dragged the index to a close of 24,740 points.
The catalyst for Wednesday’s carnage was an unexpected decision by Germany’s defense ministry to halt the F126 frigate program, a contract worth €12.8 billion that Rheinmetall had counted on. The stock crashed as much as 20.3 percent intraday before settling 18.7 percent lower. The shockwaves hit the wider defense sector too: Hensoldt slid 3.3 percent and Renk dropped 8.1 percent.
Thursday brought a complete reversal in tone. Money rushed out of defensive names and into cyclical tech stocks, led by Infineon. The Munich-based chipmaker surged more than 7 percent to €84.45 after US peer Micron issued an upbeat sales forecast that analysts called a strong tailwind for the whole semicon industry. Siemens Energy added nearly 3 percent on a positive management update about new grid orders, while Adidas matched that gain.
Rheinmetall itself steadied in early trade, but the damage to investor sentiment from Wednesday’s blow remained palpable. “The fear that the rally could end abruptly is out there,” said Thomas Altmann of QC Partners. “But many are also scared of leaving the party too early.”
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The sector rotation was not the only story. On the losing side, Fresenius Medical Care dropped almost 5 percent to €40.18 after a competitor posted weak trial data on new dialysis treatments, raising doubts about FMC’s own market position. At SAP, profit-taking after the stock’s recent record run held it back.
Wednesday had offered a mix of contradictory undercurrents. Oil prices tumbled 3.5 percent to $77.59 a barrel — the lowest since the outbreak of the Middle East conflict — as US-Iran talks progressed. Lower energy costs typically ease input prices for industrial companies, but that positive signal was completely overshadowed by the defense shock. Wall Street’s advance (Dow +0.9%, S&P 500 and Nasdaq each +0.6%) also failed to lift Frankfurt. The Ifo business climate index rose marginally in June, but it was not enough to change the mood.
Chart technicians see a clearer picture now. The DAX has recovered comfortably above its 50-day moving average of 24,591.16 points, and the relative strength index at 53.1 indicates neutral territory — neither overbought nor oversold. The year-to-date gain now stands at 1.43 percent after the Thursday rebound, up from less than 1 percent on Wednesday.
The immediate upside resistance sits at 24,900 points, with a break above that level potentially opening a run toward the June 19 high of 25,181. On the downside, first support is at 24,723 — Wednesday’s low — and if that fails, the June 10 trough at 24,038 comes into view.
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All eyes now turn to the US PCE deflator due at 14:30 CET. As the Federal Reserve’s preferred inflation gauge, the data will heavily influence near-term rate expectations. A softer reading could push the DAX above 24,900; an upside surprise would likely trigger a swift test of the 24,600 support zone.
Micron’s earnings, released Wednesday evening, added an extra layer of uncertainty. The chipmaker’s results are a bellwether for the semiconductor cycle, and with the recent Broadcom selloff still fresh in traders’ minds, any disappointment could reignite selling pressure across tech stocks — even as Thursday’s rally shows how quickly the market can flip.
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