On Thursday, the Dax remained firmly in positive territory even after a strong start to the trading day. Around 12:30 p.m., the index was calculated at roughly 25,675 points, marking a gain of 0.5 percent compared to the previous trading day. The leading stocks in terms of performance were Siemens Energy, Hochtief, and Siemens, while Infineon, Symrise, and Brenntag were among the laggards.
Market analyst Andreas Lipkow from CMC Markets suggested that confidence in the stock markets had returned somewhat following the US central bank’s interest rate decision. He noted that the relief stemmed less from the rate hike itself and more from the prospect of a clear and predictable monetary policy direction in the United States.
Lipkow stated that “the Fed signals its resolve in the fight against inflation while simultaneously providing greater orientation for investors.” After a lengthy phase marked by monetary and political uncertainties that often caused market turbulence, investors can now focus more heavily on fundamental factors. For the stock exchange, the absolute level of interest rates is not the sole determinant; rather, the predictability of their future path is crucial. He concluded that the Fed had restored this much-needed clarity to the markets with yesterday’s increase.
The analyst added that while the Dax benefits only indirectly from this shift, it gains much more benefit from the return of risk appetite among international investors. However, he cautioned that German stocks still represent a bet on an economic recovery in Europe, which is heavily dependent on the further development of the US economy. Having alleviated some monetary policy pressure on the markets, the Fed must now allow economic data to take over the heavy lifting.
Supporting this optimism are the declining energy prices. According to Lipkow, reports of new oil supply routes in the Middle East are pulling the price of Brent crude closer to the psychologically important $100 mark. He believes that the nearer this threshold comes, the greater the relief will be felt in the stock markets. A sustained drop below $100 could significantly temper inflation fears and provide additional tailwinds for the European stock market recovery.
In other news, the European common currency performed slightly stronger on Thursday afternoon; the Euro was trading at $1.1477, while the dollar cost 0.8713 Euros. Meanwhile, oil prices dipped. Around noon, a barrel of North Sea Brent crude was priced at $103.70, which was a decrease of 217 cents, or 2.1 percent, from the close of the previous trading day.
