The German stock exchange’s DAX index displayed limited movement at the beginning of the trading week, closing at 24,351 points – a marginal 0.1% increase compared to the previous day. While gold prices, following a significant rally over the holiday season, experienced a notable decline, analysts suggest the underlying trend of investors seeking both yield and stability is likely to persist into the new year. This sentiment is heavily influenced by escalating geopolitical tensions.
Christine Romar, Head of Europe at CMC Markets, highlighted the precarious global landscape as a key factor impacting investor confidence. She pointed to the prolonged peace negotiations concerning Ukraine, coupled with China’s deployment of large-scale military exercises around Taiwan and Russia’s reaffirmation of support for Beijing in a potential conflict involving the island nation. These developments signify a persistent geopolitical risk that threatens to disrupt the positive performance enjoyed by investors over recent years.
Adding to the anxiety is the increasingly assertive posture adopted by US President Trump towards Venezuela, raising the specter of potential intervention in the region, a move that could destabilize Latin America. Romar cautioned that geopolitical volatility may present unforeseen challenges for investors in 2026.
The DAX demonstrated a similar lack of dynamism as seen in the days leading up to Christmas. An initial brief rally pushing the index above 24,400 points was quickly followed by sell-offs, a pattern that could signal the trading behavior of the coming weeks. Following a third consecutive year of robust stock market gains and a relatively subdued year-end rally, analysts anticipate a continued inclination for investors to take profits after price increases.
Focus remains squarely on the defense industry as investors grapple with the uncertain timeline for a lasting resolution in Ukraine. Despite cautious optimism emanating from Moscow regarding potential breakthroughs and acceptable outcomes in negotiations, concrete progress remains elusive. The prospect of a ceasefire in Ukraine is not expected to diminish Europe’s urgent need for security, suggesting that short-term profit-taking in companies like Rheinmetall should not derail the longer-term upward trajectory.
The euro weakened slightly on Monday afternoon, trading at $1.1759 (€0.8504). Gold prices saw a sharp decline, with an ounce fetching $4,338 (-4.3%). In contrast, oil prices experienced a considerable rise, with Brent crude reaching $61.94 a barrel, representing a 2.1% increase. This oil price uptick may reflect both demand and anxieties surrounding geopolitical instability affecting supply routes.