European markets opened Thursday with a subdued performance, as the German flagship index, the DAX, began trading in the red, reflecting growing investor anxieties despite recent positive signals from the Federal Reserve. By 9:30 am CEST, the DAX was calculated at approximately 24,060 points, a 0.3% decline from the previous day’s closing level. While Munich Re, Porsche Holding and Brenntag achieved gains, SAP, Siemens Energy and Airbus struggled to maintain momentum.
The initial optimism spurred by the Fed’s revised economic outlook has rapidly dissipated, according to Thomas Altmann of QC Partners, replaced by renewed concerns surrounding the escalating investments in Artificial Intelligence. “The enthusiasm following the positive economic outlook from the Fed has vanished” Altmann observed, pointing to a significant downturn in Nasdaq futures as a direct consequence of these AI anxieties. “Investors are increasingly worried about the scale of capital being deployed in the AI sector and this apprehension is now manifesting in the market.
The market’s immediate task, Altmann emphasized, is the DAX’s ability to defend the psychologically significant 24,000-point level. The index has managed to close above this threshold for four consecutive sessions, a feat now threatened by the negative influence emanating from a weakening Nasdaq. Analysts are scrutinizing whether the DAX can withstand the external pressure and maintain this recent stability.
The euro marginally strengthened to $1.1701, although analysts note this is not indicative of a broader trend and is unlikely to offset the underlying concerns impacting the DAX. Meanwhile, crude oil prices also dipped, with Brent North Sea crude falling to $61.71 per barrel, a decline of 0.8% from the previous day’s close, adding further complexity to the market’s fragile state. The combination of AI investment worries and external market pressures suggests a period of increased volatility and scrutiny for European equities.
