The German DAX index slipped into negative territory on Friday afternoon, following a sluggish start to trading. At 9:30 AM, the benchmark index was calculated at approximately 24,080 points, marking a 0.3% decrease from the previous day’s closing level.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that the DAX continued to struggle near the 24,000-point psychological level. He pointed out that SAP shares were providing necessary support in the fight to maintain stability. However, he stated that overall market nervousness was noticeably increasing before the weekend, as investors were pulling back risk from their portfolios. Furthermore, persistently rising oil prices are acting as a drag, making future inflation concerns clearer and more pronounced.
The current sentiment favors risk-averse stocks, specifically pointing to SAP, Siemens Energy, Deutsche Börse, and Deutsche Telekom. Cyclical stocks remain less popular, with BASF serving as a notable exception. BASF is considered interesting given the prospect of strong future demand for petrochemical products stemming from production shutdowns. However, it is still too early to determine whether the impact of higher selling prices or the dampening effect of increased purchasing costs will be the deciding factor.
On the macroeconomic side, general price increases are evident in German producer prices, which jumped by 2.5% in March-exceeding the expected growth rate of just 1.4%. This trend could influence the European Central Bank’s interest rate policy and continue to weigh on bond yields in the medium term.
Lipkow concluded by describing the overall situation as exceptionally challenging, one that could deteriorate or ease moment by moment, leaving no easy footing for investors.
In currency markets, the major European currency strengthened slightly on Friday afternoon; the Euro cost 1.1689 US dollars, meaning that the US Dollar bought 0.8555 Euros. Global commodity prices presented mixed results: the gold price weakened, closing at $4,682 per fine ounce following a 0.3% drop, which translated to 128.78 Euros per gram. Conversely, oil prices surged. The Brent crude oil mixed barrel cost $107.20 at mid-day German time, representing a 2.1% increase from the close of the preceding trading day.
