Market sentiment: “Relativized risks”

30. April 2025. FRANKFURT (Goldberg & Goldberg). The DAX put in an impressive performance in April. Not only because the temporary price slump of more than 16% in response to Donald Trump's tariff announcements was made up for by today, the last day of the month. At the end of the day, the sentiment survey even shows a plus. This is remarkable insofar as the tariffs initially announced by the US President against almost the entire world have been largely postponed for the time being, but not lifted.

However, the past few weeks are also a good example of the fact that stock market players, like all people, make relative assessments. This means that risks can be perceived as less dangerous, even if the actual threat they pose has remained the same - as is the case with the tariffs imposed by Trump. This is because we are often able to get used to negative economic and political conditions quite quickly. And so a few, sometimes only slightly positive news items are enough to generate a more optimistic view of the world, even if the overall situation has hardly improved. Impressions that are all the more powerful when they occur in the context of important events with a high media presence, such as the funeral service for Pope Francis in Rome.

Gone to come back?
Meanwhile, today's sentiment survey shows that the majority of institutional investors with a medium-term trading horizon have recently had the right instinct. However, the optimism of the previous week has waned: our Börse Frankfurt Sentiment Index has fallen by 11 points to a new level of +14. The bull camp has shrunk by 9 percentage points, with around four-fifths of the switchers joining the neutral investors to realize their accumulated profits. The remaining former optimists have turned their commitments around 180 degrees and enlarged the group of bears.

However, there has been a development in the opposite direction among private investors. The Börse Frankfurt Sentiment Index rose by 5 points in this panel to a new level of +22. It is noticeable that investors surveyed via social media in particular have turned previously bearish investments directly to the bull side. The other panel participants, on the other hand, have only made minor changes to their positions and remain only slightly optimistic on balance, with their Börse Frankfurt Sentiment Sub-Index currently at +2. In other words: In contrast to the institutional investors, those private investors who were not surveyed via social media are decidedly skeptical about the DAX's recent upward trend.

Fear of missing out
With today's survey, the sentiment gap between private and institutional investors has hardly changed compared to the previous week, although the signs have reversed. The former are now much more positive than their institutional counterparts. Although the DAX has gained 3.3% week-on-week, less than half of the new optimists from the previous week have taken profits so far. Apparently, the fear of missing out on further upward movements in the DAX is greater than the fear of a renewed price slump due to unfavorable trade policy developments in the USA. However, it is also worth noting that the DAX was unable to produce any significant setbacks despite the recent falls - an indication that long-term demand from abroad may have benefited eurozone equities again.

All in all, the sentiment situation for the DAX has therefore improved somewhat, especially as the domestic sellers of today could once again act as buyers in the event of setbacks (presumably at the 21,800/850 level for the first time).

by Joachim Goldberg

30 April 2025, © Goldberg & Goldberg für boerse-frankfurt.de

Der Börse Frankfurt Sentiment-Index bewegt sich zwischen -100 (totaler Pessimismus) und +100 (totaler Optimismus), der Übergang von positive in negative Werte markiert die neutrale Linie. 

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