Germany's DAX hits record high buoyed by US midterms

Germany's leading DAX stock index hit a record of 26,644.33 points on Thursday morning, surpassing the previous high of 26,618.74 points set in August.

The US midterm elections appear to have given the market plenty of momentum. The Democrats' surprisingly clear victory raised hopes that the US could take a milder course in foreign policy. 

Their clear win in the House of Representatives and the Senate also pushed the US benchmark Dow Jones Industrial higher on Wednesday.

The Democrats cannot easily reverse the policies of Republican President Donald Trump, but they can at least significantly disrupt them.

Hopes for more predictability in US politics

Jochen Stanzl, an analyst at German online bank Consorsbank, said the election result was positive for markets in several ways.

"The result was known quickly, it is unambiguous, Trump accepts it and divided political power means less risk of political surprises. The stock market loves predictability and is rising," Stanzl said.

Positive corporate results and falling oil prices also buoyed the DAX.

However, it looks set to be a dismal day for Rheinmetall investors, after the defence group had to cut its forecast again the previous evening after trading closed. Rheinmetall shares plunged almost 17%, ranking last in the DAX by a wide margin.

Many companies publish figures

Besides Rheinmetall, DAX companies Deutsche Telekom, DHL Group, Siemens Healthineers and Commerzbank reported on the past quarter on Thursday morning, while Hochtief plans to in the afternoon.

The stock market rally is in stark contrast to bad news from the German economy. Companies are cutting thousands of jobs, particularly in industry, because trade conflicts and stronger competition are eroding markets.

But investors often look not at the current situation but at the future profits of the 40 DAX companies.