The DAX began the trading day on Tuesday with losses. At approximately 9:30 AM, the main index was calculated at around 26,235 points, which represented a 0.4 percent drop from the previous day’s closing level. The leading stocks included Deutsche Telekom, Deutsche Post, and BMW, while Infineon, Siemens Energy, and Hochtief finished at the top of the gains.
Thomas Altmann of QC Partners noted that “The bond markets are now setting the pace for the capital markets.” He pointed out that the yields on 10- and 30-year German government bonds had climbed to new 15-year highs yesterday. He further stated that France must now pay for 30-year government debt as much as it did during the 2008 crisis, and 30-year yields in the United States are already at the highest level since 2007.
Altmann explained that this increasing yield environment has made bonds a much more competitive alternative to equities in capital allocation. Adding, “There is currently a battle for capital and liquidity,” he warned that rising interest rates not only increase refinancing costs for governments but also for corporations. He concluded that these higher interest rates pose a multiplied threat to already highly valued stocks.
In currency markets, the Euro was slightly weaker on Tuesday morning, trading at $1.1573, while the dollar was priced at 0.8641 Euros. Meanwhile, oil prices rose; a barrel of North Sea Brent crude cost $91.22 around German time 9 AM, representing an increase of 35 cents, or 0.4 percent, compared to the previous day’s close.
