DAX 40 index trading guide: constituents, market hours and how to trade

The DAX 40 is Germany’s flagship stock index. Discover more about what moves the DAX 40 price, the nature of its constituents, and how you can go about trading it.

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What is the DAX 40?

The DAX 40, or Deutscher Aktien Index, is a stock index that tracks the 40 largest publicly-listed German companies trading on the Frankfurt Stock Exchange. Created in 1988 with a value of 1,000, the DAX 40 index is weighted by market capitalisation, with the companies listed accounting for around 75% of the total market cap of the wider exchange.

The DAX 40 is often used as a benchmark for the health of the German and European economy, but is also significant in global terms due to Germany’s worldwide commercial and industrial influence. It is worth noting that the DAX 40 price factors in reinvested dividend payments, unlike other major indices.

In 2020, marketplace organiser Deutsche Boerse announced that the-then DAX 30 would become the DAX 40 as of Q4 2021. This means a broader range of industries and a change to the regulatory practices surrounding the index. 

About DAX 40 constituents

The largest constituents of the index are automobile giant Volkswagen, software juggernaut SAP and chemicals luminary Linde. Also, among the more high-profile businesses featured are clothing and footwear brand Adidas and global utility company E.ON. A recent addition to the index is Siemens Energy AG, which was listed in March 2021.   

Here’s how the DAX 40 sector composition looked at the close of 2020, when it was still known as the DAX 30. Source: Siblis Research

DAX 30 constituents by sector

Want to see the full list of companies? Click here.

How do companies list on the DAX 40?

In order to list on the DAX, companies must adhere to strict selection criteria and are reviewed quarterly to ensure their continued compliance. Such criteria include:

  • A minimum free-float of 10%
  • A legal or operating base in Germany
  • A listing in the Prime Standard segment (only for companies meeting stringent transparency rules)

Ongoing requirements for companies listed on the DAX are the submission of regular financial reports, audited earning reports, and minimum capital requirements.

How is the DAX 40 calculated?

The DAX is calculated and updated every second through the electronic trading system Xetra. It uses free-float methodology, which takes into account the number of readily-available shares and disregards those that cannot be traded, such as government-owned shares.

What does the DAX 40 price mean?

The price of the DAX 40 indicates whether the value of the companies on the index are rising or falling. If the price of the DAX 40 is increasing, it means that a specific company or group of companies are experiencing gains, which is reflected in the price of the overall index. Likewise, if the DAX 40 price is falling, it means that companies on the index are experiencing a decline in price.

How much the DAX’s price moves will depend on the company’s weight in the index. So, changes in the biggest companies on the DAX 40, such as SAP, Volkswagen or Linde – will have a larger impact on the overall index than smaller cap firms like Fresenius, Continental or RWE. 

DAX 40 price history

Take a look at the history of the DAX 40, previously known as the DAX 30, documenting some of the fundamental drivers that impacted the index’s price movements.

DAX 30 price history

What affects the DAX 40 price?

There are many potential price movers of the DAX including exchange rates, European Central Bank policy, socio-political events, chart technicals, and the performance of highly-weighted stocks in the index.

Traders should be aware that while such drivers may be expected to move the index in a given direction, there is no guarantee that the move will play out. That said, here are a few of the key factors that are worth considering when trading the DAX 40.

Exchange rates

The movement of the euro against other currencies is widely seen as a key influencer of the DAX 40 index; indeed, the DAX often shows a negative correlation to the euro. For example, as the euro weakens against USD, German exports to the US, paid for in USD, are worth more when converted back to euros. This may buoy German multinational profit margins and, in turn, encourage confidence in the index.

Conversely, a stronger euro may mean interest in the DAX 40 is dampened as international sales are worth less.

Individual company performance

As mentioned, companies that are weighted the highest in the index are more capable of moving the index than smaller constituents. For example, SAP, the largest company in the DAX 40 with the most substantial weighting, suffered a 20% dip in October 2020 that was a major contributor to the wider index falling 2.6%.

Socio-political events

Events such as Brexit, the Great Recession and the coronavirus pandemic are all capable of hitting market demand in one way or another. For example, the pandemic in 2020 had a particularly outsized impact on key sectors such as aviation and banking, with Lufthansa and Deutsche Bank seeing share prices plummet in March 2020.

How might the 2021 German election impact the DAX?

The 2021 German election will see the end of Angela Merkel's longstanding reign as Chancellor, with a range of possibilities as to her successor. The election of the Green party, for example, could mean increased fiscal spending, an easing of EU budget rules to boost investment and a permanent EU recovery fund. If these events were to accelerate economic growth, interest rate rises could be brought closer. 

The resulting boost that rate hikes would likely bring to the euro could in turn cause the export-reliant DAX to fall. Naturally, alternative parties that limit spending a little more might see more controlled growth which may have a less pronounced effect on the euro and the DAX in turn. 

Average returns of the DAX 40

Over the last ten years, the DAX has produced an average annual return of 8.2%. The DAX’s average returns are essentially what managed funds will have earned in profit for investors over the course of a year.

You can see the yearly returns from 2011-2020 below. Remember, past returns are no guarantee of future performance.

DAX 30 returns year on year

DAX 40 market hours

The DAX 40 market hours are between 9am – 5.30pm in Central European (CET) time but out of hours prices are also calculated through the late DAX (5.30pm – 10pm CET time) and early DAX (8am to 9am CET time). The index is usually available for trading 24 hours a day.

How to trade the DAX 40

There are a number of ways that you can trade the DAX 40, or 'Germany 40' as we list the index. The most common are derivatives such as CFDs, futures and options, as well as ETFs. All of these instruments enable you to get exposure to all 40 companies from a single position.

DAX CFDs

Contracts for difference (CFDs) are derivatives that take their price from the underlying market, in this case the DAX 40. As you’ll never be taking ownership of an asset, you can speculate on whether the index is going to rise or fall in value.

Learn more about CFDs.

DAX futures

Futures contracts are agreements to exchange an asset a set price on a set expiry date. Unlike most futures, DAX 40 contracts don’t have an underlying physical asset to exchange, as an index is nothing more than a number representing a group of stocks.

DAX 40 options

DAX 40 options are contracts that give you the right, but not the obligation, to buy or sell the index at a set price on a set date.

When DAX 40 options are available to trade with us, you’d be doing so via CFDs. 

DAX stocks and ETFs

You can also trade the DAX through ETFs, or investment instruments that hold a group of stocks – in this case, the shares of constituents on the index. 

Alternatively, stocks on the DAX 40 can naturally be traded individually, offering an opportunity to focus on particular sectors of interest.

Find out more about share trading with us.

DAX 40 companies ranked by market capitalisation

Here is a list of DAX 40 companies listed by market cap, correct as of May 26 2021. 

Rank

Ticker

Company name

1

SAP

SAP

2

LIN

Linde

3

VOW3.DE

Volkswagen

4

SIEGY

Siemens

5

ALIZF

Allianz

6

DAI.DE

Daimler

7

DTE.DE

Deutsche Telekom

8

BFFAF

BASF

9

DPW.DE

Deutsche Post

10

MRK.DE

Merck

11

ADDDF

adidas

12

BMW.DE

BMW

13

BAYZF

Bayer

14

IFX.DE

Infineon

15

HELKF

Henkel vz.

16

MUV.VI

Münchener Rückversicherungs-Gesellschaft

17

DHER.F

Delivery Hero

18

VNA.DE

Vonovia

19

EOAN.DE

E.ON

20

DBOEF

Deutsche Börse

21

DB

Deutsche Bank

22

FRE.DE

Fresenius

23

CON.DE

Continental

24

RWE.DE

RWE

25

FMS

Fresenius Medical Care

26

SMEGF

Siemens Energy

27

DWNI.DE

Deutsche Wohnen

28

HEI.DE

HeidelbergCement

29

MTX.DE

MTU Aero Engines

30

1COV.F

Covestro

 


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