The Dax index suffered significant losses at the start of the week. By the Xetra closing, the index had been calculated at 21,428 points, a decline of 1.4 percent compared to the previous trading day.
“Analogous to the possibility of a trade war sparked by the new US president, Trump, being seemingly completely ignored by investors in the past weeks, fear of an endless spiral of retaliatory tariffs and their negative effects on global trade has now returned to the market” said Konstantin Oldenburger, a market analyst at CMC Markets.
“Until the weekend, the threat of tariffs was viewed as a negotiating tactic or a campaign slogan, rather than a serious economic proposal. However, the concept was seemingly fundamentally misunderstood, namely that the person with whom one is negotiating must believe that one is serious about what one says.”
“The market also seemed to assume that tariffs would be introduced gradually or selectively, as suggested by the new US finance minister. Perhaps the US trading partners also made this assumption. However, this could be the reason for Trump’s direct announcements over the weekend.”
“The Dax in Frankfurt also faltered at the start of the new trading week, losing up to 500 points from its record highs seen just a week ago. When the news broke that the tariffs against Mexico were indeed postponed for a month, hope for more negotiating tactics returned, leading to a partial recovery of the markets in New York and Frankfurt.”
“Investors should not be swayed by the situation and should instead wait and see how the situation between the US and the European Union develops, as the tariffs have not even been decided upon in Europe” Oldenburger advised.
The European common currency was stronger on Monday afternoon, with one euro costing 1.0303 US dollars and one dollar being worth 0.9706 euros.