The Dax index climbed into positive territory by midday on Tuesday, following a cautious start to the trading day. By approximately 12:30 PM, the leading index stood at around 25,515 points, representing a gain of 0.6 percent over the previous day’s closing level. Stock performances varied widely, with Infineon, Siemens Energy, and Siemens among the biggest winners, while Bayer, Fresenius Medical Care, and Rheinmetall finished near the bottom of the price list.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that despite some profit-taking immediately after the market opened, the Dax recovered and returned to its comfortable range. He explained that investors are betting on a potential de-escalation in the Middle East, anticipating positive consequences for inflation and the global economy.
Furthermore, he highlighted the prominence of technology and AI stocks within the German leading index. Despite recent concerns regarding growth, investments, and valuations, the AI narrative remains appealing to many investors. While the first cracks are becoming visible, Lipkow believes the story is far from broken. He added that as long as investors maintain faith in the long-term growth prospects, pullbacks in these relevant stocks will continue to be viewed as buying opportunities.
Regarding the European economic outlook, Lipkow described mixed signals. Industrial confidence is continuing to recover from its low points, yet sentiment in the service sector is lagging expectations. Overall, this data is sufficient to keep the hope of an economic recovery alive. Although the economy is currently not providing a convincing growth narrative, it offers enough arguments to prevent the dismissal of the recovery thesis.
In contrast, the FTSE 100 is showing its unique characteristics compared to other European markets. While rising energy prices present an inflationary problem for many stock markets, the commodity-heavy British index can even benefit from its energy companies. Meanwhile, UK credit and mortgage data paints a diverse picture: while consumer loan issuance exceeded expectations, the number of mortgage approvals declined. However, the overall mortgage lending volume surpassed market expectations. This confirms an inconsistent picture, showing both continued consumer demand and the strain of high financing costs.
Lipkow concluded that the FTSE has proven remarkably robust throughout September. Its specific industry structure is benefiting the index in the current market phase. While other indices are struggling with the seasonal autumn market downturns, the FTSE has managed to hold up comparatively well thanks to its defensive and commodity-focused orientation.
On currency and commodity markets, the Euro was weaker on Tuesday afternoon, trading at $1.1342 per dollar, or the dollar at 0.8817 Euro. The gold price saw gains, rising to $4,150 per fine ounce in the afternoon, a 0.9 percent increase, equivalent to 117.64 Euro per gram. Conversely, the oil price decreased; the North Sea Brent crude barrel cost $104.90 around 12 PM German time on Tuesday, down by 34 cents, or 0.3 percent, from the previous close.
