The DAX remained in negative territory throughout the trading day on Friday, even surviving a sluggish start. By approximately 12:30 PM, the leading index was calculated at around 25,535 points, a drop of 0.7 percent from the previous day’s closing level. While companies like Deutsche Telekom, Volkswagen, and Mercedes-Benz featured near the bottom of the performance list, the shares of chip manufacturer Infineon managed to defy the prevailing negative trend.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that “investors in the German stock market are surprisingly reserved during this ‘Witches’ Sabbath’.” He observed that the DAX appears to be stuck within a narrow range, between 25,500 and 25,650 points, with larger movements currently absent.
Lipkow went on to say that Artificial Intelligence (AI) stocks, and companies benefiting from the expansion of AI infrastructure, provide an exception to the overall market lethargy, at least partially insulating them from the downturn. He explained that derivatives market participants currently hold the reins. The large short selling trend is likely to keep the DAX confined to narrow bands until the Xetra closing auction, although it could still cause sharp swings in individual stocks in between. Consequently, Lipkow suggested that while current fundamental news may only play a secondary role, the derivatives market dominates the cash markets.
Furthermore, according to Lipkow, the production prices released in the morning offer little compelling argument for further stock purchases. The higher than expected price hike increasingly confirms that the extended period of high energy costs is leaving its mark on the German economy. Although falling oil prices are currently providing relief, their positive economic impact will arrive with a delay. These latest producer prices, therefore, represent a reckoning for the high energy costs experienced in previous months.
In other market movements, the European common currency showed slight strength on Friday afternoon, with one Euro trading at $1.1483 and one US dollar costing 0.8709 Euros. The price of gold also benefited, rising 1 percent to reach $4,380 per fine ounce in the afternoon, equivalent to €122.63 per gram. Meanwhile, the oil price saw a noticeable decline. Around 12:00 PM Central European Time on Friday afternoon, a barrel of North Sea Brent oil was trading at $103.30, which was 1.5 percent lower, or 154 cents less, than the previous day’s close.
