On Thursday, the Dax showed a significant decline, closing at 24,664 points on the Xetra exchange. This marks a 1.0 percent drop compared to the previous day’s close. Throughout the morning, the index fluctuated near Wednesday’s closing level before clearly reversing into negative territory.
Addressing the downturn, Andreas Lipkow, Chief Market Analyst at CMC Markets, commented that the current market sentiment suggests investors do not view recent developments in the Middle East as a “free pass” for the Dax to resuming its run toward an all-time high. According to Lipkow, there has been too much instability, and the medium- to long-term economic impact of the conflict remains completely open.
The analyst further pointed out that, so far, corporations have managed to absorb most of the rises in energy prices rather than passing the full cost directly onto consumers. However, he warned that this trend is likely to weaken over the coming months if oil prices remain at high levels. He noted that certain effects are already visible, particularly in air travel, and subsequent secondary impacts could follow. Lipkow stressed that the Dax is currently in a precarious situation, largely dependent on developments in the energy markets. Although oil prices are declining, they are still trading at significantly higher levels than before the onset of the Iran conflict.
Regarding news that the Strait of Hormuz may reopen to shipping traffic within hours, Lipkow described it as a source of regional hope. Yet, he cautioned that investors might respond by implementing broad profit-taking, as the removal of a key risk factor would make new positive trading impulses rare.
In terms of specific index performance, Henkel, FMC, and Continental led the gains at the Frankfurt exchange, while Rheinmetall shares finished as the largest decliner.
In commodity markets, the natural gas price fell, with one megawatt-hour (MWh) for delivery in June costing €43-a one percent decrease from the previous day. If this level persists, the implied consumer price would be between nine and eleven cents per kilowatt-hour (kWh), including ancillary costs and taxes.
The oil price also saw a sharp drop: Brent crude, categorized as North Sea type, cost $98.33 per barrel on Thursday afternoon, representing a loss of 10.5 percent-or 1.154 cents-from the close of the previous trading session.
Meanwhile, the Euro was slightly stronger on Thursday afternoon, trading at $1.1764. This made the single US dollar equivalent to 0.8501 Euros.