The Dax index registered a slight decline on Tuesday, closing at 25,260 points, which represented a drop of 0.1 percent compared to the previous day’s close. Following a positive start, the index initially gained during the morning but then retracted its profits, eventually turning negative.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted a growing skepticism on Wall Street regarding the high valuations of many technology and semiconductor companies. He added that attractive yields in the bond market are increasingly becoming serious competition for stocks. Lipkow explained that when valuations are high and bond yields are attractive, the pressure on companies to justify their share prices with compelling earnings increases.
Despite quarterly figures provided by JPMorgan, Citigroup, Goldman Sachs, United Health, and Johnson & Johnson coming in better than expected, Lipkow stated that these results only partially convinced investors, highlighting how high the current standard is. Even solid numbers are no longer enough to spark new market enthusiasm; companies now need to significantly exceed expectations to attract more buyers.
Goldman Sachs stood out as an exception, having surpassed optimistic forecasts with record revenues and a booming advisory business. Lipkow noted that these figures indicate that the earnings season contains potentially positive surprises, although the critical question remains whether such results will be isolated or if the strength in profits will spread to other sectors.
The analyst also pointed out the noticeable demand for recently heavily corrected stocks in the Dax. Defensive stocks such as Symrise, Deutsche Telekom, and Vonovia appeared frequently on investor buying lists. Lipkow suggested that after significant price losses, the risk-to-reward ratio for these companies seems to have become more attractive. However, he cautioned that underlying fundamental pressures remain unchanged. He clarified that the moderate recovery should therefore be viewed less as a sign of renewed confidence and more as a targeted search for undervalued shares, noting that investors are currently buying “loser stocks” from previous weeks rather than participating in the broader market.
Leading the Dax 40 list toward the close were Symrise shares, followed by those of BMW and Brenntag. Closing last were the stocks of Siemens Energy and Infineon.
On a commodity note, the price of natural gas increased. A megawatt-hour (MWh) of gas delivered in November cost 87 euros, a 3 percent increase from the previous day. If this price level persists, the consumer price would amount to at least around 14 to 16 cents per kilowatt-hour (kWh), including taxes and ancillary costs.
Conversely, the oil price dropped. A barrel of Brent North Sea crude cost $105.90 on Tuesday afternoon around 5 p.m. German time, which was 78 cents, or 0.7 percent, less than the close of the prior trading day.
Finally, the European currency showed strength on Tuesday afternoon. The euro traded at $1.1194, meaning the dollar could be bought for 0.8933 euros.
