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The brief plunge at the beginning of August has already been forgotten by investors, and on the 29th, the German blue-chip index, the Dax, set a new historical high after more than three months. Analysts point out that the recent continuous rise in German stocks is likely mainly due to technical factors. Professional investors expect the index to fall back by the end of the year.

On Thursday, the Dax index was barely affected by the decline of US tech stocks the night before, opening high and rising quickly, soon breaking the historical high set on May 15th, and then maintaining a high level, eventually closing at a record high.

On the same day, Germany's preliminary August consumer price index (CPI) rose to 2% for the first time in three and a half years (according to Eurostat), a significant drop beyond economists' previous expectations (2.3%).

Although the significant drop in inflation is mainly due to the high base of energy prices last year, the price of services, especially wages, has not slowed down, and core inflation is still at a high level. However, experts believe that the significant drop in German inflation data indicates that the eurozone's August inflation rate to be released on Friday will dispel doubts about the European Central Bank (ECB) cutting interest rates again in two weeks.

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The Governor of the Bank of Portugal, Mario Centeno, said that the interest rate cut on September 12th was a "simple" decision.

Michael Hayes, Chief Economist at asset management company HQ Trust, said that Germany has finally received good economic news, and inflation is "now more in the ECB's comfort zone."

On Thursday, the yield on two-year German federal bonds fell by 3 basis points, and the euro-to-US dollar exchange rate broke through the 1.1100 mark, reflecting traders' expectations that the ECB will continue to lower key interest rates. The prospect of a rate cut in the eurozone has also strengthened the general optimism of stock market investors.

Although the Dax index fell by 8% in the first three trading days of August, the index began to rise continuously, with only two slight declines in the past 18 trading days.

Some analysis points out that in the short term, the Dax index is likely to continue to rise. This rise is not much related to the fundamentals but is mainly due to the fact that many short positions that bet on the market's decline during the stock index plunge now have to buy stocks at high prices to prevent greater losses, known as "short squeeze."

The latest investor sentiment survey from the Frankfurt Stock Exchange also confirms that both professional investors and ordinary private investors are skeptical about the current rebound. In particular, the expectations of professionals have deteriorated for three consecutive weeks.Investor behavior expert Goldberg believes that after the Dax index reaches new highs, there may be further short squeezes, meaning that prices could rise significantly without any fundamental reasons.

So far this year, the Dax index has risen by nearly 13%, outperforming the European benchmark index Stoxx 50, which has risen by over 9%, exceeding the expectations of most analysts at the beginning of the year. The latter has not been able to break its historical record, which was set before the internet bubble burst in 2000.

However, market analysts believe that the potential for the Dax index to rise is almost exhausted. Both Bloomberg and recent surveys of investment bank experts by German media show that the average year-end forecast for the Dax index by experts is lower than the current level.

Recently, expectations of a significant and rapid interest rate cut by the United States, which has supported the continuous rise of the stock market, have also weakened. The U.S. employment data that previously triggered the stock market crash did not show a further worsening trend, and new unemployment benefit claims are quite stable. Moreover, the U.S. economic growth in the second quarter was stronger than expected. This greatly reduces the possibility that the Federal Reserve will cut interest rates by 50 basis points in September.

In addition, despite the decline in Germany's inflation rate, the widely expected rebound in consumption that would support the recovery of the German economy has not yet appeared.

The actual wage growth in Germany in the first quarter (adjusted for inflation) even reached the strongest level of 3.8% since the relevant statistics began in 2008. This increase was still as high as 3.1% in the second quarter, which is also the fifth consecutive quarter of growth in Germany's real wages.

Despite the increase in purchasing power, private consumption in Germany has not yet reached the expected growth. This is considered one of the main reasons why the largest economy in Europe has repeatedly hovered on the edge of recession.

Carsten Brzesk, head of macro research at ING Bank Group, said that consumption remains an uncertain factor for the second half of the year. If neither the European Cup nor the rise in real wages can bring a significant breakthrough for German consumption, then the future outlook is even more pessimistic. Due to the obvious cooling of the labor market, coupled with the fact that the growth in real wages cannot compensate for the loss of purchasing power in previous years, the recovery of consumption may be very limited.

Friedrich Heinemann, an economist at the European Economic Research Center in Mannheim, said that the hope that the decline in inflation will stimulate consumption now may be deceptive. Controlling inflation has only achieved temporary success, but there has been no breakthrough in price stability.