30 am, a 0.9 percent decline from the previous day’s close.
Market analysts are attributing the decline to the Dax’s recent surge, which has seen the index rise by nearly 30 percent since April without a pause. “The Dax has now set itself back from the 24,000-point mark and this looks like a seasonal high that is typical of the past ten years, formed around this time of the year” said Jochen Stanzl, chief market analyst at CMC Markets. “This could mean that the market will fall until the first days of October. The Dax also desperately needs a correction.”
The decline in the Dax’s value is also being attributed to a decrease in the appetite for risk among investors, as tensions in the trade conflict persist and geopolitical developments continue to spread nervousness. The recent comments made by US President Donald Trump on Iran’s nuclear capabilities, as well as new threats of tariffs, have also spooked investors, with Trump set to send letters to all countries in two weeks to inform them of the new tariffs that will come into effect on July 9. “Many people are reminded of the events of early April, when a similar approach led to a global decline in stock market values” Stanzl said.
While some may view Trump’s new threat as an attempt to emphasize the urgency of ongoing talks, others believe that it may lead to higher tariffs. “Given that it has now been legally clarified that Trump’s unilateral tariffs, including reciprocal and Fentanyl-related tariffs against Canada and Mexico, are enforceable, it is unlikely that he will back down” Stanzl said. “The tariffs will come, albeit in a milder form and it would be surprising if this did not lead to new volatility in the markets.”
Investors are likely to try to buy into the current weakness in the hope that Trump will either not send the letters or that something will be said to relativize his original threat by the time the letters are sent. In the meantime, the gold price is seen as a potential trendsetter to the upside, with a sharp dollar devaluation to its lowest level since April and an intact downward trend in the Dax since June 5. A reversal in these trends is not technically possible at the moment, according to Stanzl.
The European common currency was slightly stronger in the morning, with one euro equivalent to 1.1511 US dollars and one dollar worth 0.8687 euros.