Investors Divided as Global Markets Diverge
The German Dax index finished the trading day with a 0.6% decline, closing at 23,498 points, a stark contrast to the record highs seen in the US. As the trading day came to a close, Rheinmetall, Heidelberg Materials and Siemens Energy led the pack, while Commerzbank, Porsche and the Telekom trailed behind.
According to Jochen Stanzl, chief market analyst at CMC Markets, the investor community is currently split, with developments in New York and Frankfurt taking different turns. “The gap between German and US stocks, which had opened up in favor of German values since the beginning of the year, has at least narrowed today” he said.
While the US is hoping for interest rate cuts later in the year, European investors are concerned about US tariffs to be implemented later in the year. “Trade policy is likely to become the dominant theme on the stock market in the coming two weeks” Stanzl warned. “Investors should not make too many hopes that the negotiations with the US will lead to a complete removal of the already threatened tariffs.” Instead, the best-case scenario would be further negotiations after July 9, with the tariffs remaining suspended. “The risk of new tensions arising, which could also push the stock market off track again, is high.”
Given this uncertainty, gold ETFs are currently in vogue, with investors pouring in capital to the point of the highest level since August 2023. “They are collecting more capital, with the deposit reaching its highest level since August 2023” the market expert said. Although the gold price has been trending sideways, the ETFs have seen a significant increase in the past four weeks, with investors betting on a continuation of the rally in the second half of the year, despite the gold price already rising by 27% this year.
The euro was slightly stronger in the afternoon, with one euro equivalent to 1.1625 US dollars and one dollar to 0.8602 euros. Meanwhile, the oil price saw a significant increase, with a barrel of Brent crude oil trading at 68.16 US dollars, a 1.5% increase from the previous trading day’s close.