The German DAX sank steeply on Thursday. At the Xetra closing, the index traded at 24,309 points, a decline of 2.1 percent compared with its previous close. After a sluggish start to the day, the DAX amplified its losses in the afternoon.
Just before the market close, shares of Siemens, EGA, and Vonovia topped the price list in Frankfurt, while SAP stock fell sharply, plunging almost 16 percent and becoming the clear laggard.
Commenting on the drop, Christine Romar, Head of Europe at CMC Markets, said: “If the biggest technology company on the Frankfurt exchange is already showing signs of a growth slowdown at this stage, the DAX cannot help but lose nearly 500 points”. She added that SAP’s large weighting is numerically responsible for a significant share of the losses, and that Microsoft’s disappointment the previous day added to the negative sentiment for a benchmark index that had started the new trading year with high hopes.
Romar noted that SAP may soon stumble over its own business model. “As Walldorf increasingly integrates AI into its processes, customers could switch to cheaper AI solutions tomorrow and abandon the costly SAP platform”. While management still speaks of full order books that should translate into future profitability, investors are likening SAP to the highly hyped U.S. tech stocks: at current high valuations, they won’t tolerate even a slight lag in growth.
Gas prices rose, too: a megawatt‑hour (MWh) of gas for February delivery cost €40, up three percent from the previous day. This suggests a consumer price of at least eight to eleven eurocents per kilowatt‑hour (kWh), including taxes and other charges, if the level remains sustained.
Oil prices jumped sharply; a barrel of North Sea Brent crude fetched $70.78 on Thursday afternoon around 5 p.m. German time, up 3.5 percent from the previous day’s close.
The euro also traded a touch lower on Thursday afternoon: one euro was worth $1.1932, and one dollar could be exchanged for €0.8381.