The German stock market benchmark, the DAX, gained traction on Wednesday, closing at 24,240 points – a 0.8 percent increase compared to the previous day’s close. However, market analysts noted that the upward momentum was tempered throughout the trading session.
Jochen Stanzl, lead market analyst at CMC Markets, explained that the muted progress stemmed from comparisons to the Asian market. “The DAX didn’t really gain significant drive today because Japan isn’s the European Union” he stated. “Concerns are emerging in Frankfurt that a deal with Europe may fall short of expectations, particularly given that the recently concluded Asian trade agreement is being touted as the ‘biggest of all time'”. As a result, the DAX remains in a technically neutral range between 24,000 and 24,500 points, where price fluctuations lack clear directional significance.
The reporting season for corporate earnings is currently underway, revealing a recurring theme across numerous reports: the uncertainty surrounding tariffs. This is forcing companies globally to proactively prepare for leaner times, even amidst generally positive business performance. Instead of the usual practice of cutting costs when business slows, companies are implementing efficiency programs.
This uncertainty is reflected in investment behavior. Investors continue to purchase stocks, even at record highs, while simultaneously increasing their holdings in gold, which has also reached historically high prices. The implication is that the removal of tariff-related uncertainty could trigger a rapid acceleration in growth, a development that is likely to be claimed by the current U.S. President.
UniCredit’s recent financial results have been particularly noteworthy, with the company revising its outlook upwards and providing additional value for shareholders. The numbers are impressive on the surface, overshadowing the fact that the acquisition of Banco BPM was abandoned and the Commerzbank merger remains unresolved.
Even without a successful merger, the Commerzbank situation has spurred growth that benefits UniCredit. However, analysts point to a contrast between the bank’s lower operating profit and the overall elevated profit due to one-off effects.
The Euro weakened slightly in Wednesday afternoon trading, fetching 1.1724 US dollars, with a dollar worth 0.8530 euros.
The gold price also decreased, trading at 3,412 US dollars per fine ounce (-0.5 percent), equivalent to 93.56 euros per gram.
Crude oil prices also experienced a decline: a barrel of North Sea Brent crude traded at 68.16 US dollars, a decrease of 43 cents or 0.6 percent compared to the end of the previous trading day.