The German stock index (Dax) started the trading day on Friday morning with a positive trend. By 9:30 a.m., the benchmark index was valued at approximately 24,910 points, marking a gain of 0.6 percent from the previous day’s closing level.
According to Andreas Lipkow, Chief Market Analyst at CMC Markets, fear of rising interest rates has returned to the stock market. This is attributed to continued increases in crude oil prices and the European Central Bank’s indication that it expects further price hikes due to high energy costs. Furthermore, robust US job market data weighed on sentiment, as it grants the US Federal Reserve more flexibility for interest rate hikes without significantly harming the US economy. Finally, disappointing quarterly results across various companies led to losses in major indices.
While Asian markets took the lead, with prices falling in Japan, South Korea, and China, the Frankfurt market showed signs of moderation this morning following yesterday’s decline in the Dax. SAP, the software group from Walldorf, beat expectations with better-than-anticipated quarterly results, driven by growth in its key cloud business.
In contrast, quarterly figures from Porsche and Volkswagen fell weaker than expected, causing the recent optimistic sentiment in the automotive sector to deflate again. Both companies are struggling under the burden of high restructuring costs, and investors had hoped for a faster recovery in the European car industry. However, since the sector constitutes a small percentage of the Dax composition, the price losses of VW, Mercedes-Benz, and others have minimal impact. These losses are offset by gains from index heavyweights such as SAP and Rheinmetall.
Positive momentum also flowed into European semiconductor stocks following Intel’s quarterly report. The US conglomerate posted a surprisingly strong surge in sales, exceeding expectations, which could benefit shares in Infineon, SUSS-Micro, and ASML today.
Moving forward, investors will be watching the Purchasing Managers’ Indices from both Europe and the US to gauge the continued economic trajectory in the US and European economies. On top of this, the unwelcome topic of punitive tariffs is making its way onto the agenda. US President Trump has taken a new step toward implementing tariffs against 60 countries, including those in the EU. This could merely be the beginning of further measures in this direction. Lipkow concluded that while the fight to reach the 25,000-point mark in the Dax will continue in the coming days, it is becoming increasingly difficult.
In other market movements, the European common currency strengthened slightly this Friday morning: the Euro traded at $1.1399, and the Dollar was priced at 0.8773 Euros. Gold prices remained largely unchanged, trading at $4,050 per fine ounce this morning, which translates to 114.22 Euros per gram. Conversely, the oil price dropped significantly; at 9 a.m. German time, a barrel of Brent crude from the North Sea cost $98.70, a decrease of 2.0 percent, or 199 cents, compared to the close of the previous trading day.
