Frankfurt’s DAX index opened slightly lower Friday morning. Around 9:30 AM local time, the benchmark index was calculated at approximately 24,140 points, 0.2 percent below the closing level of the previous day.
Munich Re shares experienced significant losses, falling by over seven percent. The reinsurer has recently faced further price reductions, leading to lower business volume.
“Investors in the Frankfurt stock exchange have been largely in the dark for over a week” said Jochen Stanzl, Chief Market Analyst at CMC Markets. “The DAX is stalling, as neither buyers nor sellers can gain the upper hand. A stop-loss selling wave a week ago was followed yesterday by a short squeeze. 1,000 points down, 1,000 points back up – now the DAX is back where it was before.
While the recent customs agreement between the US and the European Union has provided some clarity, uncertainty remains regarding its practical implementation. “The question is whether tariffs will add up, resulting in a 27.5 percent rate on automobiles, or whether the 15 percent tariff ceiling will apply? This morning, Japan welcomed the news that the various tariffs will not be cumulative. Will the same rules apply to Japan and the EU? It’s unclear.
The complexity surrounding tariffs is also reflected in the price of gold. A tariff announcement prompted gold to reach a new record high. Surprisingly, 1-kilogram and 100-ounce bars were found to be subject to tariff codes, eliminating the possibility of duty-free import into the US – a significant shift from the exception granted in April.
“It is currently unclear whether this is an error by US authorities or whether these tariffs only apply to imports from Switzerland, which has not yet reached a deal with the US. In any case, many Americans are currently trying to acquire physical gold bars, anticipating that tariffs will drive prices higher. This is fueling gold demand and pushing up the price” Stanzl explained.
The European currency was slightly weaker Friday morning, trading at 1.1655 US dollars per euro. Conversely, the US dollar was worth 0.8580 euros.
The price of gold eased slightly, with one fine ounce trading at 3,396 US dollars (-0.1 percent) in the morning. This corresponds to a price of 93.68 euros per gram.