The DAX saw a noticeable decline on Tuesday, closing at 22,922 points, marking a 1.1 percent loss compared to the previous day’s close. Although the index began the day losing ground, it managed to move into positive territory during the morning session before slipping back into negative territory in the afternoon.
Andreas Lipkow, Chief Market Analyst at CMC Markets, pointed to the ultimatum set for Iran, which expires at 2 AM Central European Time, as the market’s dominant concern. He noted that US President Trump’s choice of words leaves no doubt that a severe military strike against Iran is expected after the deadline expires. According to Lipkow, the rhetoric has recently intensified, heightening investors’ worries about further escalation, potentially involving US ground troops within Iran. This situation is compounded by Iran’s issuing counter-demands and facing mounting global economic pressure due to disruptions in supply and delivery chains. Furthermore, Tehran has announced the termination of all dialogue channels. Earlier in the day, rumors suggesting an extension of the ultimatum, coupled with negotiation efforts involving five friendly nations and eight intelligence agencies, temporarily uplifted market sentiment and pushed the DAX significantly into positive territory, the analyst explained.
In his view, European Purchasing Managers’ Indices released today reflect underlying uncertainty and rising energy prices. Lipkow stated, “Most reported data came in slightly below expectation levels. The PMI for Italy, in fact, has fallen below the 50 mark”.
Almost until the market closed, most DAX stocks were trading in the red. Heidelberg Materials recorded the lowest performance. In contrast, shares of BASF and Brenntag led the gains.
Meanwhile, natural gas prices rose; a Megawatt-hour (MWh) of gas for delivery in May cost 53 Euros, an increase of five percent from the previous day. If this price level remains constant, it implies a consumer price of at least around ten to twelve cents per kilowatt-hour (kWh), including incidental costs and taxes.
Crude oil prices also rose significantly for their type. A barrel of North Sea Brent crude cost $110.90 on Tuesday afternoon around 5 PM Central European Time, which represents a 1.0 percent increase from the closing price of the previous trading day.
The European common currency strengthened on Tuesday afternoon; one Euro cost $1.1574, meaning one dollar could be acquired for 0.8640 Euros.