The DAX experienced a significant decline on Wednesday, closing at 24,796 points on the Xetra exchange. This represented a drop of 1.3 percent compared to the previous day’s closing figures. After a weak start to the trading day, the DAX continued to push its losses.
According to Andreas Lipkow, Chief Market Analyst at CMC Markets, the fresh influx of tariff threats from the White House regarding the Middle East uncertainty has reintroduced an old risk factor. Lipkow noted that US President Trump intends to impose higher tariffs on countries in the Eurozone and Great Britain. This development was decisive for the day, putting the DAX firmly on a downward trajectory away from the 25,000-point mark.
Lipkow added that market sentiment is growing increasingly anxious, with many investors feeling nervous. He pointed out that the performance of the stock market currently only marginally reflects the real economy. This disconnect, however, could catch up later, particularly if enthusiasm for semiconductor and AI stocks begins to fade. Meanwhile, the situation in Iran remains unchanged, and oil prices continue to climb.
While Lipkow states that the Eurozone economy currently appears stable, it lacks any significant growth. The increases observed in European stock markets have been primarily driven by technology companies and defense contractors. He observed that the earlier hope for an economic boost following the Iranian crisis had provided a lift to automotive and chemicals stocks, but those hopes appear to have now vanished.
Furthermore, the Eurozone’s price levels remain high, significantly exceeding the central bank’s target of two percent. The analyst anticipates that this inflation will be the central topic of the upcoming central bank meeting next week. Lipkow predicts that a rate hike is inevitable. He cautions that the combination of these various risks and a more restrictive monetary policy could trigger an unprecedented financial storm, a situation currently only being held in check by the AI euphoria.
At the close of trading, RWE shares led the top movers on the Frankfurt exchange, while SAP and Scout 24 figures appeared toward the bottom of the list.
In other market segments, gas prices rose, with a Megawatt-hour (MWh) of gas delivered in July costing 49 euros-a three percent increase from the previous day. If this pricing remains stable, the consumer price would equate to at least nine to twelve cents per kilowatt-hour (kWh), including taxes and additional costs. Oil prices also increased; a barrel of Brent crude in the North Sea cost $97.47 on Wednesday afternoon at around 5 PM German time, an increase of 1.5 percent from the close of the prior trading session. The Euro also weakened somewhat on Wednesday afternoon, trading at $1.1610 per euro, meaning the dollar was available for 0.8613 euros.
