Wednesday saw the Dax index slightly increase. By the close of trading on Xetra, the index measured 24,935 points, reflecting a gain of 0.1 percent compared to the previous day’s closing figure. After a weak start to the session, the Dax temporarily rose in the middle of the day before holding near the previous day’s close amid fluctuations.
In terms of individual stocks, shares of Bayer and Commerzbank led the performance list, while automotive companies Porsche, Volkswagen, Mercedes-Benz, and BMW recorded the lowest gains.
Andreas Lipkow, Chief Market Analyst at CMC Markets, commented that the automotive sector continues to act as a drag on the Dax, preventing the index from reaching 25,000 points. He noted that BMW is beginning to sound increasingly cautious, mirroring Volkswagen’s sentiment. Both corporations are signaling that the sales crisis is far from over and that competition in key global markets has intensified. According to the analyst, thus the hopes of many investors for an imminent recovery in the core German industry were premature.
Lipkow elaborated that while premium manufacturers were previously considered relatively secure and untouchable, as competitive pressure largely focused on the mid-range segment, price wars have now entered parts of the premium segment, which is dampening the margins of German automakers. He also attributed a portion of the sales decline to inflation, noting that more consumers are postponing car purchases or opting for models from the mid-class segment.
Meanwhile, investors are awaiting the US Federal Reserve meeting, paying particular attention to statements from its new Chairman, Kevin Warsh. Lipkow noted that Warsh is taking on a challenging role, having to follow in the footsteps of industry giants. While the overall economic situation in the United States was recently shown to be robust, it lacked significant momentum. Rising prices, however, dampened hopes for further interest rate cuts. The market is now seeking clarity on the new monetary and interest rate policy strategy and how the new council members will approach future rate decisions.
In the commodities sphere, the price of gas declined. A megawatt-hour (MWh) of gas to be delivered in July cost 42 euros, representing a 1 percent drop from the previous day. If prices remain stable, this implies a consumer price of at least approximately nine to eleven cents per kilowatt-hour (kWh), including ancillary costs and taxes. Conversely, the oil price rose noticeably. Brent crude oil was priced at $80.15 per barrel on Wednesday afternoon, 1.5 percent higher than the previous day’s closing price.
The European currency weakened slightly on Wednesday afternoon. One Euro traded at $1.1592, meaning that the Dollar was available for 0.8627 Euros. Gold prices managed to benefit, with fine ounces being traded for $4,357 in the afternoon (+0.6 percent). This equates to a price of 120.85 Euros per gram.
