The Dax index declined on Wednesday, closing at 24,195 points, marking a 0.3 percent drop compared to the previous day’s close. After a positive start, the index dipped into negative territory, experiencing a period of recovery before falling again in the afternoon.
According to Andreas Lipkow, Chief Market Analyst at CMC Markets, European investors remain concerned about the proposed extended ceasefire in the Iran situation, even as New York’s indices remain strong. Lipkow noted that the blockade of the Strait of Hormuz is exempt from this truce, meaning maritime traffic remains restricted. This situation is reflected in the oil prices, with the North Sea grade Brent once again trading above $100 per barrel.
Lipkow added that European economies are projected to be hit harder by elevated energy costs than those in the United States, a factor that is currently being priced into the market. Furthermore, the unilaterally extended truce does not ease the Middle East situation; rather, it complicates it. This is because it remains unclear who can sustainably lead negotiations with the US from the Iranian side and whether any potential agreements could actually be implemented.
Consequently, the focus of investors is shifting toward the ongoing reporting season, according to the analyst. Investors are hoping to gain insights into the economic health of various sectors. Boeing, a US aircraft manufacturer, failed to meet market expectations regarding its deliveries. Later that evening, Tesla’s figures are scheduled to be released, and the general sentiment remains cautious, tempered by high expectations.
In Frankfurt, Siemens Energy stocks led the performance board until near the market close, followed by shares of RWE and Infineon. Conversely, the shares of Deutsche Telekom, MTU, and Commerzbank recorded the lowest figures.
Meanwhile, natural gas prices rose; a megawatt-hour (MWh) of gas for May delivery cost 43 euros, a four percent increase from the previous day. If this price level persists, it implies a consumer price of at least around nine to eleven cents per kilowatt-hour (kWh), including ancillary costs and taxes.
Oil prices also saw a significant jump. On Wednesday afternoon, around 5 PM German time, a barrel of Brent North Sea crude cost $101.40, representing a 3.0 percent increase from the previous day’s closing.
The European common currency showed slight weakness on Wednesday afternoon: one euro cost $1.1723, meaning one dollar exchanged for 0.8530 euros.