The German Dax index fell on Wednesday, closing at 24,038 points, a decline of 0.8 percent from the previous day’s close.
Market analyst Jochen Stanzl of CMC Markets attributed the decline to a lack of follow-through on the index’s record high opening, which was largely driven by caution ahead of quarterly earnings reports from prominent US companies, including Nvidia. “The Dax had a classic bad start today” Stanzl said. “The record high at the start of trading was not enough to sustain the rally, as many investors were hesitant to make new purchases, fearing a negative surprise from companies like Nvidia, which has a market capitalization roughly one and a half times that of the Dax.”
Stanzl noted that the market’s dependence on Nvidia has decreased in recent months, with the expected volatility in the company’s stock price ranging from a six percent increase or decrease, a smaller range than in previous quarters. The increased breadth of the Nasdaq 100, however, has somewhat dampened the impact of a single stock’s movement.
Despite this, the potential impact of a six percent move in Nvidia’s stock price is significant, with a market capitalization equivalent to nearly 175 billion euros, or around 2,100 Dax points. “So, one or two investors today decided to take a few chips off the table” Stanzl said.
Market sentiment was also affected by rumors of a possible resignation of European Central Bank President Christine Lagarde, which could impact the bank’s monetary policy decisions, including potential interest rate cuts later in the year.
The euro weakened against the US dollar, with one euro equivalent to 1.1295 US dollars and the dollar worth 0.8853 euros. The Brent crude oil price, meanwhile, rose by 1.5 percent to 65.04 US dollars per barrel.