Market Sentiment: “The Cost of Fear”

May 27, 2026. FRANKFURT (Goldberg & Goldberg). We’ve had a brutal week in terms of market sentiment. At least for pessimists. Since last Wednesday, the DAX has also risen impressively, resulting in a solid weekly gain of 4.1 percent. It was a close call, and the local stock market barometer—like the S&P 500 and Nasdaq 100 in the U.S. before it—would have hit a new record high. Once again, the main drivers cited for this strong performance were the perennial topic of AI, as well as growing hopes for peace in the Iran conflict. Even though the U.S. markets appear to have overheated and there are certainly valid counterarguments to the generally positive perception of the negotiations between the U.S. and Iran, the DAX here in Germany also seems to be in high demand. In other words: skepticism, pessimism, and possibly the fear of a crash in overheated U.S. stock markets took their toll, causing the DAX to lose over 1,000 points at times since last Wednesday alone.

Now, further pessimism has taken hold among the institutional investors with a medium-term trading horizon whom we surveyed. Our Deutsche Börse Sentiment Index has fallen by 8 points to a new low of -12, its lowest level since mid-January. As was the case last week, former optimists have once again shifted their bullish positions in the rising market to the bearish side—a complete 180-degree turn.

No buying ahead of record high

The shift in sentiment—the bull camp has shrunk by 4 percentage points in favor of the pessimists—shows once again that some investors apparently have serious doubts about whether the DAX will actually continue to rise. At the same time, the DAX’s proximity to its previous record high may have played a role as a benchmark, especially if one considers the recent price rise to be fundamentally unjustified.

Among retail investors, there was only a slight change—but in the opposite direction: The Deutsche Börse Sentiment Index for this group rose by just 3 points to a new level of +11. The group of bulls grew by 2 percentage points, an increase driven roughly equally by former pessimists and neutral investors. However, the picture changes when we look separately at those retail investors we do not survey via social media. There, the slight pessimism of the previous week (similar to that among institutional investors) has actually intensified somewhat, which is why we can record a 2-point decline in the Sentiment Index for this subgroup to a new level of -3. On balance, the investors we survey via social media are actually slightly more bullish than they were the previous week. This has created a gap between these two subgroups, which is currently at its highest level this year.

No Extreme Values Yet

Meanwhile, the gap in sentiment between retail and institutional investors has widened compared to the previous week. On balance, however, some institutional investors are already facing a more significant performance problem. This is especially true given that the Deutsche Börse Sentiment Index for this panel has already lost a total of 30 points over the past two weeks. From a relative perspective, both over the past three months and since the start of the year, today’s pessimism is even more pronounced and ranks among the lowest levels of the year. However, even from this perspective, we cannot yet speak of extreme values.

For the DAX’s future trajectory, today’s survey suggests that—at least from the perspective of domestic institutional investors—there isn’t an abundance of selling pressure should the market barometer continue to rise. The downside is even better supported than last week, though we now expect initial buying interest from bearish positions in the 24,550–24,600 DAX range. However, it seems questionable whether we can also count on demand from foreign investors in the event of a DAX pullback (triggered, for example, by disappointed expectations regarding the Iran crisis). This remains the Achilles’ heel in an otherwise sentiment-friendly environment for further DAX gains.

by Joachim Goldberg

May 27, 2026, © Goldberg & Goldberg für Deutsche Börse

The Deutsche Börse Sentiment Index ranges from -100 (total pessimism) to +100 (total optimism); the transition from positive to negative values marks the neutral line.

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