The German stock index DAX turned sharply negative on Wednesday. At the close of the Xetra trading session the index stood at 23 502 points, a full 1.0 % lower than the day before.
Investors were particularly focused on the U.S. Federal Reserve meeting, where the bank’s interest‑rate decision will be announced in the evening. Although a rate cut is not expected today, market participants worry that the outlook could bring bad news. U.S. investors seem to anticipate this, and their shares fell from the start of trading.
One factor contributing to the nervousness is the stronger‑than‑expected rise in U.S. producer prices, combined with climbing energy costs, which suggests inflation may rise soon. “The economy is stagnating while prices are climbing – a scenario that leaves little room for rate cuts” said Andreas Lipkow of CMC Markets.
Despite the broader sell‑off, the day’s overall performance remained positive for the DAX thanks to the Commerzbank stock. Two days after Unicredit’s takeover offer, investors appear more concerned with the firm’s strict plan for implementation than with the modest premium above the current share price. They view the offer as simply a gauge of approval, believing that Unicredit could soon pursue a more aggressive strategy. “The political block‑holding stance could yield a corresponding premium package in this case” Lipkow added.
On Wednesday afternoon, the euro weakened slightly against the dollar: one euro fetched 1.1511 USD, while one U.S. dollar was worth 0.8687 euro.
