30 am, marginally above Friday’s closing level.. BASF, Siemens and Heidelberg Materials led the performance on the day, while FMC, Commerzbank and Rheinmetall were among the underperformers.
Jochen Stanzl, Chief Market Analyst at CMC Markets, attributed the subdued start to ongoing uncertainty regarding trade policies. “The uncertainty surrounding trade policy continues to escalate” he stated. “Even if the European Union and the United States reach an agreement, it will likely be a framework agreement at best, with further details requiring ongoing negotiations. Realistically, the probability of this uncertainty persisting beyond August 1st remains high. Investors may be anticipating too much from a deal with the U.S.
Stanzl suggested that market sentiment had become overly optimistic in recent weeks. He pointed to a sentiment analysis indicating a potential cooling in the market and observed concerning patterns in recent Dax movements. “The record high achieved on July 10th now appears, with the benefit of hindsight, to resemble a potential bull trap”. The rally has since stalled.
Further decline, specifically a drop below the 24,000-point mark, would confirm this trend reversal, potentially initiating more significant losses, a development consistent with the time of year. A worst-case scenario could see the Dax decrease by as much as ten percent, potentially pushing it down to the 21,000 to 22,000-point range.
Multiple factors could contribute to a Dax decline. These include the European Central Bank’s expected decision not to further reduce interest rates on Thursday, potentially signaling a period of observation. Additionally, the upcoming earnings season might reveal disappointing results due to ongoing tariff uncertainties, geopolitical tensions and the strengthening Euro.
However, Stanzl emphasized that the risk of a trend reversal could be averted if the Dax remains above 24,000 points or even reaches new highs. Much depends on the leading companies within the Dax proving capable of compensating for weakness in other sectors. The forthcoming earnings reports will be crucial in determining whether this can be achieved.
The Euro was slightly stronger on Monday morning, trading at $1.1642, with a dollar fetching €0.8590. Meanwhile, the Brent crude oil price declined slightly, reaching $69.17 per barrel against the German time of 9:00 am – a decrease of 11 cents or 0.2 percent from the previous day’s closing price.
