The German DAX index began the trading day on Wednesday with significant losses. Around 9:30 AM, the benchmark index was calculated at approximately 25,175 points, which was 1.1 percent below the previous day’s closing level. Scout24, Eon, and RWE were leading the list of top performers, while MTU, Vonovia, and Deutsche Bank were at the bottom.
Jochen Stanzl, Chief Market Analyst at Consorsbank, commented on the severe market decline, stating that the recent reciprocal attacks between Iran and the USA had escalated beyond what could be described as mere skirmishes in the preceding days. He added that the combination of this geopolitical situation with a fresh embargo on Iranian oil exports was particularly destabilizing, occurring precisely when markets were hoping to dismiss geopolitical risks and accompanying inflation concerns. Stanzl noted, “The recent developments do not represent a departure from the peace process. However, they are a move in the wrong direction.”
Meanwhile, a slow but steady sense of summer lethargy is creeping into the stock markets. According to Stanzl, investors are increasingly fruitlessly searching for a new compelling reason to invest in stocks as the corporate earnings calendar opens up. Presently, investors are pinning their hopes on new stimulus from the beginning of the US reporting season. However, he cautioned that the expectations tied to this period are very high-perhaps too high-which increases the risk of disappointment. A consolidation period over the next three to four weeks is becoming increasingly probable until the reporting season clarifies the investment landscape.
In other market segments, the European common currency was slightly stronger on Wednesday morning; the Euro traded at $1.1422, meaning one dollar was worth 0.8755 Euros. Meanwhile, oil prices saw a sharp increase. By 9 AM German time, a barrel of Brent crude from the North Sea was priced at $76.57, representing an increase of 3.3 percent from the close of the previous trading day.
