On Wednesday, the Dax managed to claw its way into positive territory during the middle of the trading day, after starting slightly negatively. The index was recorded at approximately 24,945 points around 12:50 PM, representing a gain of 0.1 percent compared to the previous trading day. Leading the list of performers were Zalando, Bayer, and Commerzbank, while BMW, Mercedes-Benz, and Volkswagen finished at the tail end of the ranking.
Andreas Lipkow, Chief Market Analyst at CMC Markets, commented that the automotive sector continues to act as a drag on the Dax, keeping the index below the 25,000 point mark. He noted that Volkswagen has begun to temper expectations, and BMW is now adopting a more cautious tone. Both companies indicated that the sales crisis is not yet over, and that competition in key markets has intensified. Consequently, the hope held by many investors for a swift recovery in the core German industries was premature.
According to Lipkow, premium manufacturers were previously viewed as relatively immune to crises, as competitive pressures were largely concentrated in the mid-range segment. However, he pointed out that price wars have now encroached upon parts of the premium segment, putting pressure on the profit margins of German automakers. Meanwhile, inflation is contributing to the decline in sales, as more consumers are postponing car purchases or switching to models in the middle market.
The analyst further added that investors are increasingly focusing on technology stocks and representative companies from defensive sectors. Regarding consumer stocks, hesitant buying has been observed for shares of Beiersdorf and Henkel, reflecting hopes for improving consumer sentiment.
