The German DAX gained considerably at the start of the week. When the Xetra market closed, the index stood at 22 562 points, a 1.2 % rise compared with the previous trading day.
“Trading in the DAX is still largely driven by news from the Middle East” said Andreas Lipkow, chief market analyst at CMC Markets. “Today the mood was lifted, at least momentarily, by the U.S. President’s remarks about advancing negotiations with Iran. According to the White House, twelve of the fifteen items on the demand catalogue have already been successfully negotiated. However, the veracity of those claims and the real progress in the talks cannot be independently verified”.
Overall, the market conditions remain harsh. It is still difficult to predict how the rapidly climbing energy prices will translate into broad inflation or how high oil could remain. “One thing is certain: the widespread infrastructure damage in the Middle East is likely to block any swift disinflationary trend” added Lipkow.
German inflation had rebounded to 2.7 % in March. Given the steep rise in energy costs, consumer prices could have climbed above the three‑percent ceiling. Whether the price‑curbing effects that appeared in April will persist is still unclear. The risk of an inflation shock cannot be dismissed. Parallels can be drawn to the period after the Ukraine war break‑out.
At present the DAX benefits from relatively low trading volume, which has eased selling pressure. But it is still too early to declare relief. “If U.S. ground troops were deployed in the Iran conflict, a new chapter would almost certainly be opened” Lipkow warned.
On the currency side, the euro was weaker on Monday afternoon: one euro equalled $1.1456, and one dollar could be exchanged for €0.8729.
Gold performed strongly, trading at $4 551 per troy ounce on the afternoon trading session, a 1.3 % increase. This translates to €127.71 per gram.
Oil prices slipped slightly. Brent crude was priced at $112.50 per barrel at about 17:00 German time, a drop of three cents, or 0.0 %, compared with the previous day’s closing.