The DAX recorded gains on Wednesday, concluding the Xetra trading session at 25,538 points, representing an increase of 0.5 percent compared to the previous day’s close. After a positive start, the index lost some of its gains by midday before recovering later in the day.
Andreas Lipkow, Chief Market Analyst at CMC Markets, commented that investors remained cautious in European markets ahead of the US Federal Reserve’s interest rate decision. He suggested that tonight’s market movement would be driven less by the actual decision and more by the Fed’s overall tone and its assessment of the current economic situation.
Lipkow pointed out that the Fed has struggled in recent years to sustainably bring inflation back to its 2% target. Furthermore, continued high energy prices pose new inflationary risks. He explained that today, the Fed’s task extends beyond merely setting the key interest rate; it must credibly communicate how it plans to control inflation without overlooking the dangers of a slowdown in economic growth.
The analyst added that the Fed’s actions today overshadowed the published US import prices and retail sales. Investors merely noted these figures and are likely to re-evaluate them following the central bank’s press conference. According to Lipkow, the focus today is less on what the economic data indicates and more on what the Federal Reserve “does” with that information.
Looking at sector performance, the recently subdued AI and semiconductor stocks are regaining attention mid-week, he noted. Following some sharp drops in their prices, some investors began purchasing these stocks again, capitalizing on the lower valuations. These recent setbacks in the AI sector have, at least partially, begun to lose their severity. However, whether this will lead to a sustainable rally will also depend on the signals the Fed sends tonight.
In contrast, the automotive industry continues to face significant challenges. Lipkow explained that worsening forecasts for the global car market are putting pressure on European manufacturers and once again cast doubt on hopes for a swift recovery. While high-tech stocks that recently fell sharply are seeing early buyers return, the auto industry still lacks the necessary arguments for a durable investor comeback.
Towards the end of trading, Siemens, Continental, and Hochtief led the list of top performers. In the end, Commerzbank, Mercedes-Benz, and Volkswagen were among the stocks noted.
In other markets, the price of gas fell. A megawatt-hour (MWh) of gas delivered in October cost €78, which is two percent lower than the previous day. If this pricing level remains constant, it implies a consumer price of at least around 13 to 15 cents per kilowatt-hour (kWh), including ancillary costs and taxes.
Oil prices declined notably. On Wednesday afternoon, around 17:00 CET, a barrel of Brent crude from the North Sea was priced at $105.10 USD-a drop of 3.4 percent, or 366 cents.
The Euro weakened slightly during the Wednesday afternoon session. One Euro cost $1.1536 USD, while one Dollar was available for 0.8669 Euro.
Gold, however, benefited significantly, trading at $4,345 USD per fine ounce in the afternoon, an increase of 1.2 percent. This equates to a price of €121.09 per gram.
