Swiss stocks saw a notable boost on Tuesday, with the Dax index calculating at 24,400 points at the Xetra market close. This represented a gain of 0.4 percent compared to the previous day’s close. A primary driver of the market was SAP, whose shares rose by over 7 percent. This performance was attributed to the software conglomerate having released better-than-expected quarterly results and presenting an optimistic annual outlook. Furthermore, investors appear to be shifting their focus away from hardware towards software-related stocks.
Commenting on the day’s activity, Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that investors in Frankfurt were initially relieved by the shift away from planned US actions against Iran, maintaining hopes for a rapid de-escalation in the Middle East. However, he pointed out that crude oil prices remain stubbornly high, which does not align with these regional optimistic sentiments. He emphasized that the geopolitical situation remains highly fragile. For the US, the resolution of the Iranian nuclear program remains the crucial sticking point for any successful peace negotiations.
Despite the positive geopolitical headlines, the day saw the index unable to hold the higher levels achieved in the morning, as the Dax was pulled back by noticeable losses on Wall Street.
However, Lipkow observed a developing trend: a significant detachment of the Dax from its counterpart indices in New York over the past few days. He suggested that investors are recognizing considerable catching-up potential for German companies, provided that the situation in the Middle East stabilizes permanently. Previously, poor sentiment linked to the war meant that Dax stocks often lagged significantly behind their Wall Street rivals.
He noted that this current market decoupling is interesting because investors seem unconcerned about the primary drag factor: higher energy prices. This suggests a high level of optimism that market normalization in commodities will occur soon. Nevertheless, he issued a warning: higher oil prices are already starting to impact consumer behavior and numerous industries, and if prices remain elevated for several weeks, the upcoming quarterly earnings reports of companies are unlikely to be unaffected.
In other market sectors, the European common currency weakened on Tuesday afternoon, trading at 1.1600 US dollars per Euro, or conversely, a dollar cost 0.8621 Euros. The gold price experienced a significant drop, reaching $4,503 for a fine ounce by the afternoon, marking a 1.4 percent decline and equating to €124.81 per gram. Separately, the price of oil decreased sharply; by 5 PM German time on Tuesday, a barrel of Brent crude sold for $110.70, which was 1.3 percent-or 141 cents-less than the closing price of the previous trading day.