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DAX records drastic decline – what’s behind it?
Dax falls by 1.8% to 22,621 points - reason: uncertainties regarding defense investments and changes to the Basic Law.
DAX records drastic decline – what’s behind it?
On March 13, 2025, the DAX experienced a significant decline. Loud n-tv The index lost 400 points or 1.8 percent to close at 22,621 points, falling below the 23,000 point mark. Uncertainty over billions in investments in defense and infrastructure, which require a change in the constitution, has been identified as the main reason for this decline.
The desired change to the Basic Law requires a two-thirds majority in the Bundestag and Bundesrat. The Greens' approval is still pending, and the possibility of a lawsuit before the Federal Constitutional Court could also jeopardize the plans. Since the federal election, the DAX had increased in value due to speculation about a loosening of the debt brake and special funds. The current reporting season focuses in particular on two companies in the DAX: Volkswagen and Henkel.
Reporting season in focus
As part of the reporting season, Volkswagen presents its figures for the past year and gives an outlook for 2025. The focus is on topics such as an austerity program and the possible effects of US tariffs. Henkel, on the other hand, publishes its business figures and expects a possible increase in profits and a dividend. The effects of US tariff policy are also taken into account here.
In parallel with the economic developments in Germany, the NATO states are planning how tagesschau.de reported that it would spend a total of around 2.71 percent of its gross domestic product on defense in 2024. This corresponds to a total financial volume of around 1.5 trillion US dollars. European allies and Canada are expected to contribute 2.02 percent of GDP, equivalent to $507 billion.
Compared to last year, this represents a 10.9 percent increase in defense spending, with European allies and Canada recording a 17.9 percent increase. Defense spending by NATO countries has increased from $943 billion since 2014. The Russian war of aggression against Ukraine has significantly influenced the perception of the threat and thus the need for increased spending. Germany's defense spending is expected to exceed 2 percent of GDP for the first time in 2024 and amount to 2.12 percent, which will be achieved through calculation adjustments.