economy
March 11, 2026
Deutsche says these two sectors could benefit from larger German fiscal spending
Cyclicals and software stocks are poised to benefit from Germany's increased fiscal outlay after recent falls, according to analysts at Deutsche Bank.
TL;DR
- Increased German fiscal expansion may benefit cyclical and software stocks due to the Iran conflict.
- Cyclical stocks have sold off indiscriminately, while software companies have bottomed out as AI disruption fears subside.
- European and US software sectors fell significantly over the past six months due to AI disruption fears.
- Software companies are trading at historically low premiums, implying they may no longer outgrow the broader index.
- Deutsche Bank upgraded tech from underweight to neutral and software from neutral to overweight.
- Among cyclicals, Commerzbank, Siemens Energy, and Volkswagen were highlighted.
- Volkswagen reported a 53% year-on-year drop in operating profit for 2025, attributed to tariffs, currency fluctuations, and product strategy costs.
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