The DAX saw a significant decline on Thursday, closing at 24,939 points at the end of Xetra trading. This represented a decrease of 1.0 percent compared to the previous day’s close.
In terms of stock performance, Heidelberg Materials led the gains, increasing by over two percent just before the market closed, followed by Hochtief and Scout24. Conversely, Bayer shares dropped sharply, falling by over five percent shortly before trading concluded. Volkswagen and Merck also registered declines.
Andreas Lipkow, Chief Market Analyst at CMC Markets, provided commentary, noting an accelerating trend of investors pulling away from the stock market. He attributed this to rising energy prices coupled with increasing bond yields. Furthermore, he pointed out that Brent crude has risen again above $105, marking a return of inflationary concerns.
The analyst elaborated that high oil prices fuel worries about another price surge, which in turn could lead to a prolonged period of tight monetary policy. This situation is compounded by the ongoing decline in many government bond prices, driving up their yields. Lipkow highlighted that the high public debt levels in many countries make this situation particularly critical, as rising yields increase refinancing costs and narrow the financial maneuverability of governments.
According to Lipkow, the core issue isn’t necessarily that current yields are historically exceptional. Rather, he argued that states, corporations, and investors have spent years accustomed to extremely low interest rates. He stressed that the dramatic change is not the new interest rate reality, but the fact that the old one was unusual. This habituation effect is now heavily influencing pricing.
Because of this, rising bond yields are no longer merely capping stock markets; they are actively pressuring stock prices. Lipkow added that the upcoming reporting season will be crucial for the remainder of the year. He concluded that equity investments remain attractive only if profit growth is strong and companies demonstrate increased expansion in this environment. He noted that as bond market yields continue to rise, stocks must justify a higher risk premium through corresponding growth in profits.
On other fronts, the Euro weakened on Thursday afternoon, trading at 1.1241 US dollars, while the dollar was worth 0.8896 Euros. The price of gold managed to benefit, rising by 0.3 percent in the afternoon session to $4,168 per fine ounce, equivalent to 119.22 Euros per gram. Meanwhile, the oil price saw a strong increase, with a barrel of North Sea Brent crude reaching $101.70 around 5 PM German time, which was 3.7 percent higher than at the close of the prior trading day.
