The German stock index began Tuesday morning on the downside. At about 9:30 a.m., the DAX was quoted at roughly 23 505 points, a decline of 0.3 percent from yesterday’s closing level. In the top positions of the daily performance list were E.ON, RWE and Zalando, while the bottom of the list featured Brenntag, Rheinmetall and Qiagen.
Chief market analyst Jochen Stanzl of Consorsbank explained that the optimism that lifted the DAX the previous day had been erased by a surge in oil prices overnight. “Deal‑seekers may have taken a brief look at the market, but entering remains risky given the sharply increased volatility” he said. “Price gains can be wiped out within minutes, depending on geopolitical developments”.
He cautioned that, “Without proof that the escort of tankers through the Strait of Hormuz will succeed, any gains are built on sand. The high volatility continues to swing in both directions, with no clear trend”. Stanzl added that worries are growing about the pressure on the European Central Bank (ECB) to raise rates prematurely in response to rising oil prices.
“The current conflict differs fundamentally from the energy crisis in 2022” Stanzl said, noting that an abrupt ECB move is unlikely. “Nevertheless, the ECB cannot ignore the pressure, and Thursday’s policy meeting is bound to become a rhetorical tightrope walk. Christine Lagarde will probably shift her view that the monetary policy is ‘well positioned’ toward a considerably more cautious stance. A verbal adjustment, however, is all we can expect”. For the rate hikes that some are calling for, it is still far too early, he added.
The euro was a touch weaker on Tuesday morning: one euro bought 1.1493 U.S. dollars, while one U.S. dollar was worth 0.8701 euros.
Oil prices climbed sharply during the same period. At 9:00 a.m. German time, a barrel of North Sea Brent fetched $103.80, up 3.5 percent from the previous day’s close.