The German DAX index experienced a subdued performance Thursday, moving deeper into negative territory throughout the morning trading session. By midday, the index registered at approximately 24,075 points, reflecting a 0.3% decline compared to the previous day’s close. Siemens Energy, MTU and Rheinmetall led the gains, while SAP, Heidelberg Materials and Vonovia anchored the index’s losses.
Market analyst Andreas Lipkow attributed the downturn primarily to the quarterly results of SAP, a key DAX constituent. However, he emphasized that the disappointment stemmed less from the figures themselves and more from the substantial expectations held by investors, which have now triggered the downward correction. The release highlights a broader fragility in market sentiment regarding German industrial giants.
The DAX has enjoyed a considerable rally in recent weeks, fueled by optimistic projections for European and Chinese economic recovery. Lipkow argued that these assumptions are now proving unwarranted, necessitating a recalibration of valuations. This shift raises concerns about the sustainability of the recent upward trend and potentially signals a more cautious assessment of the global economic outlook.
The release of T-Mobile USA’s quarterly results, the US subsidiary of Deutsche Telekom, later in the afternoon adds another layer of uncertainty. Failure to meet expectations could further destabilize the index and impact broader market confidence. The reliance of a German powerhouse on the performance of its US operations reveals vulnerabilities in the interconnected global economy.
The Euro also weakened slightly during Thursday’s trading, buying $1.1592, with a dollar equivalent to €0.8627. Simultaneously, oil prices surged, with a barrel of Brent North Sea crude fetching $65.94, a 5.4% increase from the previous day’s close. This rise in oil prices, independent of the DAX’s performance, contributes to inflationary pressures and could further complicate the economic landscape.