European markets opened Wednesday with modest declines, as Germany’s DAX index traded around 24,290 points, representing a 0.5 percent decrease from the previous day’s closing level. Leading the gains were Deutsche Telekom, Henkel and Merck, while Rheinmetall, MTU and Siemens Energy experienced the most significant losses.
Market analyst Thomas Altmann of QC Partners noted that European indices are facing a test following a weak trading day on Wall Street. However, he emphasized that a single down day doesn’t necessarily signal an end to the recent impressive rally.
Altmann highlighted a growing expectation of increased market volatility. He pointed to the Nasdaq 100, which saw declines exceeding one percent on two occasions this month – a contrast to the single occurrence in both May and June and none in July.
A potential risk factor for the DAX, according to the analyst, is the diminished level of put option protection. The volume of outstanding put options has fallen to its lowest level since 1998, with expiring hedging positions largely unextended, potentially increasing market vulnerability to shifts in investor sentiment.
Attention is now turning to the upcoming central banking symposium in Jackson Hole, Wyoming, beginning Thursday. Federal Reserve Chair Jerome Powell is scheduled to speak on Friday and many investors are hoping for signals regarding a potential interest rate cut in September.
In currency markets, the Euro saw slight weakening, trading at 1.1644 US dollars, while the US dollar was valued at 0.8588 Euros.
Oil prices rose slightly, with Brent crude futures trading at 66.33 US dollars per barrel around 9:00 AM CEST, a 0.8 percent increase from the previous close.
