The Dax index started the trading day on Thursday with slight gains, calculated at around 22,470 points, a 0.2 percent increase from the previous day’s close. Siemens Energy, Infineon and Vonovia led the list of top performers, while Rheinmetall, Mercedes-Benz and Airbus trailed at the end.
According to Jochen Stanzl, a market analyst at CMC Markets, the market experienced a correction on Wednesday, which wiped out the previous days’ gains. “The market saw a selling wave, a kind of cleansing storm that rolled over the stock market” he said.
The analyst attributed the market’s correction to the comments made by European Central Bank Director Isabel Schnabel, who hinted that interest rate cuts might end due to persistently high inflation. In addition, the higher-than-expected inflation data from the UK contributed to the market’s uncertainty.
However, Stanzl noted that the intensity of the selling was largely due to stop-loss orders triggered by investors who had previously held onto gains.
In a bull market, corrections can lead to the strongest price losses in a short period, but the difference with a bear market lies in the fact that prices tend to recover and reach new highs after a cleansing correction.
Investors are now focusing on whether the technical mark of 22,179 points can be defended in the month’s trading.
Questions are being raised about the impact of Trump’s tariffs on economic growth, the potential consequences of a post-election government crisis and the implications of Trump’s shift in focus towards Putin. The reasons for the selling are multifaceted and a correction was “long overdue” according to Stanzl.
The European currency, the euro, was slightly stronger on Thursday, trading at 1,0437 US dollars, while the US dollar was worth 0,9581 euros.
Meanwhile, the oil price rose, with a barrel of Brent crude trading at 76,23 US dollars, a 0,3 percent increase from the previous day’s close.