The DAX index commenced trading on Wednesday with minor losses. By 9:30 AM Central European Time, the leading index was recorded at approximately 24,020 points, representing a decrease of 0.2 percent compared to the previous day’s closing level.
Among the top-performing stocks were Commerzbank, Rheinmetall and Munich Re, while Volkswagen, Siemens Energy and Infineon experienced declines.
“Inflationary pressures stemming from tariffs have unexpectedly emerged as a significant concern in the United States and this delayed recognition is now impacting stock prices” stated Jochen Stanzl, Chief Market Analyst at CMC Markets. “The DAX is struggling to maintain its gains. Seasonally and technically, the index appears vulnerable, particularly given the uncertainty surrounding the ongoing trade negotiations with the United States”. He added that the index is now lacking the monetary policy boost previously anticipated from the U.S.
The possibility of a U.S. Federal Reserve interest rate cut in September, which investors had largely factored in, is now being questioned. While two more inflation reports will be released before the next Fed meeting, “the effects of tariffs on inflation are likely to intensify further and will be more evident in the upcoming reports.
The likelihood that inflationary conditions in the United States may worsen before improving has increased. What was previously considered a near certainty for a rate reduction in September has become more balanced, with probabilities now shifting between another pause and a potential easing.
The Euro strengthened slightly against the U.S. dollar, trading at $1.1624, with the dollar fetching €0.8603.
Crude oil prices also saw a slight increase. A barrel of Brent North Sea crude was trading at $68.83 around 9:00 AM CET, representing a 12-cent or 0.2 percent increase from the previous day’s closing price.