The German benchmark index, the Dax, began a new recovery attempt early Friday. At around 9:30 a.m. local time it was trading near 23,120 points, a level 1.2 % above yesterday’s close. The highest‑gaining names were Infineon, Heidelberg Materials and Bayer, while Qiagen, Deutsche Börse and Scout24 fell to the bottom of the list.
“Today the Dax might recover somewhat” said Jochen Stanzl, chief market analyst at ConsorsBank. “But with another highly unpredictable weekend of war in the Middle East, investors’ risk appetite is likely to stay quite limited. Germany is, in general, a net energy importer, and the Dax, as a cyclical index, is especially sensitive to the fallout from the Iran conflict. There are no single ‘hold‑over’ names in the index that could steady the market”.
After almost three weeks of fighting in the region, it seems increasingly clear that even an abrupt end to the hostilities will not restore the market to its pre‑war footing. The war’s aftershocks are expected to linger for months.
Yesterday’s new low in the Dax effectively knocked out the stabilization attempts of the past two weeks. “That new trough pushes the index’s ability to find a footing back by at least another three to four weeks-at best” Stanzl explained. “A new low is traditionally seen as a signal for a continuing downward trend. It now needs an upward spark to begin forming any kind of base, but where that spark will come from remains entirely unclear”.
There is also a growing number of investors who anticipate a prolonged Iran war. “Cash is becoming a position, and more market participants seem to be embracing that idea” Stanzl added. “Meanwhile, the probability of the European Central Bank raising rates next month is rising. In the United States, the Fed may also start preparing for a later hike if the labor market stays robust. The prospect of higher rates dampens equity risk appetite while boosting the attractiveness of fixed‑income assets”.
The euro trended slightly weaker on Friday morning: it traded at 1.1575 U.S. dollars, meaning one U.S. dollar could be exchanged for 0.8639 euros.
At the same time, crude oil prices fell sharply. Brent, the North Sea benchmark, was priced at about $106.90 per barrel around 9 a.m. German time-172 cents, or 1.6 %, below the previous day’s closing level.