The DAX experienced a significant decline on Wednesday. At the close of Xetra trading, the index recorded 24,195 points, representing a loss of 1.0 percent compared to the previous day’s closing figure. After starting the day near Tuesday’s closing level, the DAX dropped sharply, although it managed to partially recover some of its losses in the afternoon.
The primary influence on the market was the release of US inflation data. Andreas Lipkow, Chief Market Analyst at CMC Markets, commented that concerns about rising inflation in the United States had caused markets to enter a state of alertness. However, relief arrived in the afternoon, as consumer prices reported a monthly increase of just 0.2 percent, placing them at the lower end of expectations. According to Lipkow, this figure does not accelerate the annual inflation rate, which currently stands at 4.3 percent.
Investors have been anticipating strong indications regarding US price development for some time now. Lipkow pointed out that similarities to the inflation experienced in the 1970s cannot be ignored, which is increasingly making trading sentiment nervous. He recalled that the oil price shock during that decade led to significant price increases in two phases, prompting action from the US Federal Reserve and resulting in major corrections in the stock market.
Furthermore, Lipkow noted that the situation in the Middle East remains fragile and continues to weigh on investor sentiment. He stated that it is currently unclear when a deal could be reached between the United States and Iran-a potential resolution that might finally lead to a sustainable ceasefire. Consequently, high energy prices and the associated inflationary risks remain key burden factors for the equity market.
The analyst explained that unless there is a concrete solution to the Middle East conflict, activity on European trading floors is likely to remain accompanied by substantial uncertainty. He added that today’s trading behavior was characterized less by an surge of sellers and more by the passive trading activities of existing buyers, which contributed to the decline in prices.
Up to the market close, shares in Telekom, Adidas, Symrise, and Zalando ranked at the top of the price list, while Siemens Energy stocks closed at the bottom.
In energy markets, the price of gas increased. A megawatt-hour (MWh) of gas contracted for July delivery cost 50 Euros, marking a three percent increase from the previous day. If this price level persists, it implies a consumer price of at least roughly ten to twelve cents per kilowatt-hour (kWh), including ancillary costs and taxes.
Oil prices also rose. A barrel of the North Sea Brent grade cost $92.82 on Wednesday afternoon at approximately 5 PM German time, an increase of 1.5 percent compared to the close of the prior trading session. Meanwhile, the European common currency saw a slight strengthening on Wednesday afternoon; one Euro was worth $1.1552, and consequently, the dollar was trading at 0.8657 Euros.
