The German DAX started the trading day on Wednesday with gains. Around 9:30 AM, the leading index was calculated at approximately 24,355 points, representing a 0.3 percent increase compared to the previous day’s closing level. Among the stocks performing best were Siemens Energy, Siemens, and Infineon, followed by Deutsche Telekom, Adidas, and Scout24.
The extension of the ceasefire in the Iran-Iraq conflict did not generate significant exuberance among investors. Thomas Altmann of QC Partners noted, “The moment of waiting is being prolonged. Personal talks are on hold for now. At the same time, the existing ceasefire remains in effect”. He explained that while the US and Iran have not moved closer to an agreement, the risk of further escalation is also temporarily mitigated.
Although the extension of the status quo might superficially suggest that the stock markets can manage without major changes, Altmann advised investors to look closer. He pointed out that the current price for readily available Brent crude oil is at least 14 percent below its record high from March. However, for a shipment scheduled six months out, the price has only fallen by five percent. Consequently, an oil delivery with a six-month lead time remains 43 percent more expensive than it was at the beginning of the year. The energy markets are increasingly pricing in a prolonged period of normalization, suggesting that high prices are likely to persist for a long time. This implies that the conflict will continue to impact the global economy and corporate profits for an extended period.
