On Wednesday, the DAX index gained ground, setting at 24,737 points at the close of Xetra trading-a rise of 1.4 percent compared to the previous day’s close. After initially moving up from the prior day’s level, the index continued solidifying these gains throughout the afternoon.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that one of the biggest positive signs for the stock market currently is the lack of news coming out of the Middle East. He commented that investors view the deceptive calm in the ongoing conflict between the US and Iran as a positive signal, prompting them to enter the market. Furthermore, the DAX received additional support in the afternoon, following the recovery of previous day’s losses on the New York indices in early trading hours ahead of the Nvidia earnings reports.
Lipkow stated that investors are betting on a continuation of the semiconductor rally, provided that Nvidia’s upcoming figures are again impressive. However, he cautioned that if the company fails to meet expectations, the stock market could quickly become volatile. Given the high level of excitement, reaching a peak that is difficult to surpass, he cautioned that while the demand for essential AI-capable semiconductors remains high, competition is fierce. Future demand will depend significantly on the scaling and monetization effects of each company’s specific business models.
Regarding economic factors, the analyst explained that investors reacted calmly to the rising producer prices in Germany. While bond yields fell slightly, Lipkow pointed out that the yield level in both Europe and the US remains a drag on stock markets. This situation reflects not only inflation expectations and resulting central bank measures, but also skepticism about the high levels of debt accumulated by the affected economies and countries.
In terms of individual listings, Infineon and MTU led the price list exchange in Frankfurt by the end of the trading session, while BASF and SAP recorded the biggest declines.
Meanwhile, energy prices saw significant movements. The cost of one megawatt-hour (MWh) of gas for delivery in June fell to 49 Euros, a six percent decrease from the previous day. If this price level remains constant, it implies a consumer price of at least nine to twelve cents per kilowatt-hour (kWh), inclusive of ancillary costs and taxes.
The price of Brent crude oil also dropped sharply, closing at $106.40 per barrel late Wednesday afternoon (around 5 PM German time). This represented a decline of $4.40, or 4.4 percent, compared to the previous day’s close.
Finally, the European common currency strengthened slightly on Wednesday afternoon: the Euro cost $1.1631, meaning the dollar exchanged for 0.8598 Euros.
