The DAX experienced losses at the beginning of the week. At the close of trading on Xetra, the index was calculated at 25,003 points, marking a 0.4 percent decline compared to the previous trading day. Although SAP stood out as a clear leader on the gains list, the vast majority of stocks registered negative performance, with shares from Rheinmetall, Airbus, and MTU being particularly affected.
Andreas Lipkow, lead market analyst at CMC Markets, noted that the heavy weight of SAP had pushed the DAX into positive territory around midday. However, gains evaporated when news broke that Iran had dropped all talks with the United States and re-closed the Strait of Hormuz. This development caused oil prices to jump, and investor concern over the potential continuation of the conflict in Iran remains high.
Lipkow elaborated that it is currently unclear whether a sustainable peace can be achieved in the Middle East following the latest step, which involved a 60-day ceasefire. This regional uncertainty is reflected in energy prices, which cannot fully break free from their elevated levels. Even though extreme prices have pulled back temporarily, the risk of a sustained inflationary rate remains latent in financial markets.
Regarding the technology sector, SAP benefited from the recent hype surrounding Artificial Intelligence and cloud computing. Investors are now recognizing SAP’s significant potential and recognizing its major infrastructural contributions, a perception that was previously limited by focusing only on the disruptive risks of AI in the SaaS sector. Similar stock movements have recently been observed in other industry players such as ServiceNow and Salesforce. Nevertheless, German investors are finding it challenging to translate the Fear of Missing Out (FOMO) euphoria surrounding AI and semiconductors into the domestic German stock market.
Interestingly, May has proven to be a relatively strong month for the stock exchange, and investors have not shown any sign of pulling back from the markets at the start of the new month. Despite the themes suggesting caution over the summer months, the DAX is still operating in close proximity to its all-time high, indicating a high degree of resilience among investors against current risks and high valuations.
In related markets, the Euro weakened on Monday afternoon, trading at 1.1623 US Dollars, making the Dollar worth 0.8604 Euros. Gold prices declined notably, falling 1.5 percent in the afternoon to $4,471 per fine ounce, which equates to 123.68 Euros per gram. Meanwhile, the oil market surged strongly. Around 5:00 PM German time on Monday, a barrel of Brent North Sea oil cost $96.34, representing a 5.7 percent increase from the close of the previous trading session.
