The German DAX began the trading day weakly on Thursday morning. As of approximately 9:30 a.m., the leading index was valued at around 25,420 points, representing a 0.9 percent drop from the previous day’s closing level.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that investors are currently experiencing a rollercoaster ride between impressive quarterly figures and growing doubts about the future of the AI boom. While companies like Meta and SAP managed to exceed expectations with their earnings reports, the substantial ongoing investments in artificial intelligence are generating increased skepticism. The crucial question remains how and when these billions in investment will successfully translate into sustainable profits.
This uncertainty prompted profit-taking in technology and semiconductor stocks on Asian exchanges. While investors are rewarding growth, they are increasingly questioning the profitability of these investments. Lipkow observed that good quarterly results alone are no longer sufficient to justify the high valuations; companies must prove that the AI boom will develop into a permanently profitable business model.
For the German stock market, the figures from SAP offered initial positive momentum. The Walldorf software group performed well in both revenue and profit. However, more cautious statements regarding the crucial fourth quarter indicate that even successful tech companies are increasingly feeling the pressure of challenging economic conditions. In contrast, Tesla disappointed, with results falling short of expectations and highlighting that consumer reluctance is now significantly impacting major international corporations.
Additional downward pressure comes from continuously rising energy costs. With Brent crude trading at approximately 112 US dollars a barrel, the volatile situation in the Middle East remains a significant risk factor for inflation and corporate earnings. Diplomatic efforts aimed at resolving the war in Ukraine are temporarily taking a backseat amid the immediate strain caused by energy prices.
Looking ahead, the day’s trading agenda promises further movement with numerous corporate earnings announcements and upcoming US labor market data. Lipkow stated that the earnings season is increasingly becoming a litmus test for the high expectations placed on equity markets. He warned that the markets are currently navigating a phase where good news is rarely rewarded, but disappointments are punished even more severely, making them susceptible to intense price fluctuations.
Separately, the European common currency strengthened slightly on Thursday morning. The euro traded at 1.1243 US dollars, while the dollar was valued at 0.8894 euros. Meanwhile, the price of gold declined noticeably, trading at $4,097 per fine ounce in the morning, equating to 117.16 euros per gram. Conversely, the price of oil rose sharply. Brent crude from the North Sea cost around $111.60 per barrel at 9 a.m. German time, marking a 2.5 percent increase compared to the previous day’s close.
