The DAX opened on Wednesday with a significant jump, following the ceasefire in the Iran conflict. The leading index was calculated at around 24,110 points near 9:30 AM, marking a substantial increase of 5.2 percent from the previous day’s closing level. Companies like Siemens Energy, Infineon, and Heidelberg Materials topped the performance list, followed by the Deutsche Börse, BASF, and RWE.
Thomas Altmann of QC Partners noted that the ceasefire was positive news for the global economy and for stock markets. He commented, “The threatened devastating attacks are at least temporarily suspended. Now, the upcoming discussions must show whether a sustainably viable path to peace can be found”. This opening of the Strait of Hormuz, he added, allows for the transport of oil from full storage reserves.
According to Altmann, the markets are celebrating the truce, as seen by the plunge in oil prices, rising stock values, and falling interest rates. There is hope that central banks may consider the inflationary surge as temporary and consequently ease the tightness of their monetary policies. Furthermore, he suggested that the rally would surely be boosted by traders who are forced to close or are closing their short positions.
Despite the prevailing euphoria, one important consideration remains, according to the market expert. He warned, “It will take a long time for the energy market to return to normal operation”. He pointed out that OPEC nations produced a volume of oil in March that was comparable to only the August of 1990, which was during the Gulf War. This volume represents a current shortfall, and many oil fields must gradually be brought back to full capacity, alongside damages, especially in gas production areas.
Early Wednesday, the Eurozone’s currency showed strength, with one Euro costing 1.1693 US Dollars, meaning a Dollar was valued at 0.8552 Euros. Meanwhile, oil prices experienced a steep decline. A barrel of North Sea benchmark Brent crude cost approximately 94.53 US Dollars at 9 AM German time, which was a decrease of $14.74, or 13.5 percent, compared to the closing prices of the previous trading day.