The leading German index, DAX, opened its trading day sharply higher on Wednesday, recovering from the preceding ceasefire related to the conflict in Iran. Around 9:30 AM, the index was calculated at approximately 24,110 points, marking a substantial gain of 5.2 percent compared to the previous day’s closing level. Among the best-performing stocks were Siemens Energy, Infineon, and Heidelberg Materials, while the Deutsche Börse, BASF, and RWE also showed gains.
Thomas Altmann of QC Partners commented that the ceasefire represented positive news for both the global economy and the stock markets, noting that the threat of devastating attacks was at least postponed. He added that the upcoming diplomatic talks would now need to determine if a sustainable path toward lasting peace could be found. He pointed out that the opening of the Strait of Hormuz would allow oil stored in full reserves to be transported.
Altmann described the market sentiment as euphoric, observing that stock markets are celebrating the ceasefire, oil prices are dropping, and interest rates are falling. He expressed hope that central banks would regard the current inflationary surge as temporary, leading to a less restrictive monetary policy. Furthermore, he suggested that those who are obligated to close their short positions would fuel the market rally.
However, he cautioned that despite the excitement, one crucial point must not be overlooked: the energy market will take a considerable time to return to normal functioning. He highlighted that the OPEC nations produced an amount of oil in March comparable only to August 1990-a period during the Gulf War. He noted that this deficit of oil needed to be addressed, as many oil fields would need to ramp up production gradually, compounded by notable damage, particularly in gas production areas.
On other fronts, the European common currency strengthened early Wednesday; the Euro traded at 1.1693 US dollars, meaning a dollar cost 0.8552 Euros. Meanwhile, the oil price experienced a significant drop. By 9:00 AM German time, a barrel of North Sea Brent crude cost $94.53, a decrease of $14.74, or 13.5 percent, compared to the close of the previous trading day.
