The DAX 40 hit a new high on Tuesday despite multiple headwinds. Strong performances in the technology, financial, and industrial sectors have fuelled the rally.

The index reached the 20,000 mark for the first time. Gaining roughly 20% year to date, the market has been the best performer in the European markets, which defies bleak economic outlook.

SAP, Europe's largest technology firm, has seen its shares soar 65%. It reported robust Q3 earnings and raised its full-year outlook, driven by its strategic focus on AI.

Local banks continued to benefit from higher interest rates, while the industrial companies have prospered amid increased defence spending in both Europe and the US following Russia-Ukraine war.

But carmakers have not got out of the hole. Soaring inflation, intensifying competition from Chinese EVs, weak global demand, and high energy transition costs have taken a toll.

Germany's manufacturing sector remained firmly entrenched in contraction territory in November, highlighting ongoing challenges for Europe's largest economy, a survey showed on Monday.

The DAX index retained its strong momentum well above 50 SMA. The uptrend was intact though RSI close to 70 suggested potential retreat around the corner.

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