The DAX dropped significantly at the close of the week. The index settled at 25,304 points upon the Xetra trading close, marking a 1.6 percent decrease compared to the previous day’s closing level. Following a weak start, the DAX continued to lose ground throughout the remainder of the trading session.
Andreas Lipkow, Chief Market Analyst at CMC Markets, commented that investors in the German stock market appeared to have lost their momentum near the weekend. He specifically pointed out that major automakers and index blue-chips like SAP and Deutsche Telekom were the primary drivers pushing the leading index lower today.
Lipkow added that the German producer prices released this morning provided little convincing reason for investors to buy stocks. The stronger-than-expected price increase, he explained, confirms that the long period of high energy costs is still impacting the German economy. While declining oil prices currently offer some relief, their positive effect on the economy is delayed. Consequently, today’s producer prices are essentially an accounting of the high energy rates experienced in previous months.
This anxiety regarding inflation continues to shape market activity, according to the analyst. Central banks have declared inflation their common enemy, but they cannot influence the root cause of rising energy costs. He stressed that this presents the greatest risk to the stock market: the longer oil prices remain high, the more challenging it becomes for central banks to balance the fight against inflation with maintaining economic stability.
As the trading day neared its end, only shares in Infineon, Hochtief, and Rheinmetall were trading in the green. At the bottom of the pack were the stocks of Mercedes Benz, Deutsche Telekom, and Volkswagen.
Meanwhile, the gas price rose. A megawatt-hour (MWh) of gas delivered in October cost 80 euros, representing a five percent increase from the previous day. If this price level remains stable, this implies a consumer price of at least around 13 to 15 cents per kilowatt-hour (kWh), including ancillary costs and taxes.
In contrast, the price of oil dropped slightly. A barrel of Brent crude off the North Sea cost $104.60 on Friday afternoon around 5 p.m. Central European Time, which is $0.19-or 0.2 percent-less than the closing price of the previous trading day.
The European common currency weakened slightly on Friday afternoon; the euro was trading at $1.1465, while the dollar was consequently available for 0.8722 euros. The price of gold performed well, climbing to $4,355 per troy ounce in the afternoon (+0.4 percent), corresponding to an exchange rate of 122.11 euros per gram.
