The DAX opened weakly on Thursday morning. At approximately 9:30 a.m., the leading index was calculated at around 25,880 points, representing a 1.3 percent drop from the previous day’s close.
Andreas Lipkow, Chief Market Analyst at CMC Markets, commented that the positive signals coming out of Asia were being rejected by the German stock market. He specifically noted that the recent enthusiasm in the semiconductor sector following Micron Technology’s quarterly results was failing to materialize. Furthermore, he pointed out that the handful of companies in the DAX that directly benefit from strong chip demand remained easily identifiable.
This situation once again highlights a structural disadvantage of Germany’s benchmark index. While Wall Street and parts of Asia benefited from the ongoing story surrounding AI and semiconductors, the DAX is only capturing a fraction of that upside. Instead, it is feeling the full weight of headwinds from high energy prices and increasing bond yields.
Lipkow stressed that oil prices remain a major source of pressure, keeping concerns about further inflationary surges and heightened consumer hesitancy alive. Although yesterday’s US PCE data suggested some easing in price pressures, he cautioned that this alone is insufficient for a sustainable reprieve.
The rise in bond yields continues to drive down many government bond prices. This creates a dual pressure on equities: companies face increasing financing costs, while bond alternatives become more attractive investments. Lipkow suggests that as long as yields continue to climb, this mechanism will act as a cap on stock market returns.
In his view, the markets are becoming increasingly polarized. The excitement surrounding AI continues to fuel strong growth fantasies, yet volatile oil prices and rising yields are simultaneously deteriorating the fundamental valuation basis for stocks. He concluded that the longer these two global forces diverge, the more susceptible the markets will become to significant volatility.
In other market movements, the European common currency weakened slightly on Thursday morning; the euro traded at $1.1308, meaning the dollar was available for 0.8843 euros. The price of gold remained virtually unchanged, holding steady at $4,158 per fine ounce in the morning, which translates to 118.21 euros per gram. Conversely, oil prices rose; a barrel of Brent crude traded shortly before 9 a.m. German time at $98.95, an increase of 92 cents, or 0.9 percent, over the previous close.
