We are entering the DAX year 2026 with cautious optimism. The DAX is likely to receive a tailwind from the German economy in 2026, which is finally expected to grow more strongly again at 1.2 percent. The US economy will probably expand surprisingly strongly by 2.2 percent, driven by a US key interest rate that will likely fall unexpectedly to 2.5 percent due to political pressure. We believe earnings growth of 6 to 8 percent is possible for DAX corporate earnings in 2026, while DAX valuation metrics such as the P/E ratio (price-earnings ratio) are likely to move sideways at a high level. 25 DAX companies are likely to increase their dividends in 2026. Nevertheless, the DAX dividend total is likely to fall by 2 percent to 51.8 billion euros in 2026, because dividend distributions in the DAX auto sector will probably fall again significantly by 37 percent to 7.5 billion euros. And in 2026, DAX investors are likely to have additional buying opportunities during two or three DAX consolidations, in which the implied DAX volatility VDAX will probably jump well above 20 in each case.
Trend 1: In 2026, the DAX is likely to receive tailwind from the German economy, which is growing at 1.2 percent, for the first time in many years
For three years, the German economy has been stagnating in a disappointing state of stagnation. But that should finally change in 2026 thanks to the German government’s large fiscal package and increasing defense spending in Europe. We expect growth in the German economy to accelerate from 0.1 percent in 2025 to 1.2 percent in 2026. From the first quarter of 2026, the economy is expected to grow robustly and steadily at rates of 0.3 to 0.4 percent from quarter to quarter. This means that many DAX companies will probably receive tailwind from a growing domestic market in 2026 for the first time in many years (see Table 1).