The DAX gained ground on Tuesday. At the close of trading on Xetra, the index registered 25,591 points, marking a rise of 0.7 percent compared to the previous day’s closing figures. Infineon’s shares led the gains, seeing a sharp jump of over five percent just before the close, followed by Siemens Energy and Hochtief. Conversely, Mercedes-Benz shares finished at the bottom of the list, having dropped sharply by over three percent toward the market close, with Beiersdorf and BMW also posting negative results.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that investors in Frankfurt seem to be adjusting to persistently high energy prices while recognizing the limits of monetary policy options. He pointed out that despite the possibility of further interest rate hikes potentially dampening demand, these measures would not alter the fundamental causes of price pressure. The analyst further added that neither the conflict in the Middle East nor the central banks’ actions can end the war, nor can they increase the energy supply. “On the contrary,” he stated, “additional monetary tightening would strain the already fragile economy.”
Meanwhile, recent quarterly reports from major consumer goods corporations offered little cause for optimism. Lipkow explained that the results from Nestlé, Reckitt, and Beiersdorf demonstrate that consumers are increasingly adapting their purchasing behavior to rising living costs. Brand manufacturers, in particular, are feeling the growing price sensitivity of their customers. He stressed that this consumer restraint is no longer limited to basic commodities; the latest earnings from Hermès and Louis Vuitton show that even affluent customers are becoming more cautious. Consequently, it is becoming more difficult for companies to pass on rising costs without jeopardizing sales and market share.
This dilemma was underscored by recent US economic data. The weak-than-expected ADP employment figures and the disappointing industrial orders suggest slowing economic momentum. Yet, retail sales remain robust, and the Case-Shiller housing price index signals a slight recovery in the real estate market for August. Lipkow concluded that the US economy is sending mixed signals that do not make the central banks’ decisions any easier.
The decisive phase is set to begin on Wednesday with upcoming central bank meetings and the quarterly results from Alphabet, Amazon, and Microsoft. Lipkow predicts that volatility should initially decrease, leading to stable trading ranges. However, he cautions that this calm must not be mistaken for easing. He warns that if monetary policy, economic data, and the business figures of the largest technology corporations converge almost simultaneously, investors could quickly be caught off guard.
In other markets, the European community currency weakened on Tuesday afternoon. The euro traded at $1.1142, while the dollar fetched 0.8975 euros. Gold posted a significant gain, rising to $4,060 per fine ounce in the afternoon (+1.2 percent), equivalent to 117.14 euros per gram. Conversely, oil prices saw a notable decline. The Brent crude barrel traded at $114.00 around 5 PM German time, representing a drop of 183 cents, or 1.6 percent, compared to the previous trading day’s close.
