Flash in the Pan! DAX Heads South Once Again
The market isn't buying the recent narrative that the U.S. and Israeli campaign against Iran is already "won." Consequently, prices immediately pivoted back toward the south. As previously suspected, the recovery in equity markets was premature. To make matters worse, representatives from the European Central Bank are already citing inflation rates above 3% if oil prices do not normalize soon. Both Germany and several other European nations, along with the U.S., have tapped into their strategic petroleum reserves to counter the rapidly rising cost of crude. Investors are deeply concerned that this situation will stifle the global economy, leading to a massive hit on revenues and earnings for DAX-listed companies if central banks are forced to curb consumption to dampen price spikes.
The DAX lost 1.37% on Wednesday, closing far below the 24,000-point mark at 23,640.03 points. Among individual stocks, Fresenius was significantly affected, dropping by 2.1% to a closing price of €47.29. On the winning side was Brenntag, which managed to gain 3.0%, paradoxically benefiting from the higher crude oil and raw material prices. A look at the three-month performance reveals the extent of the damage: Heidelberg Materials has lost 22.4% during this period, while the DAX heavyweight SAP has seen its value slashed by 19.3%.
Technical Summary: Support is Crumbling
Technically, the DAX remains under heavy pressure. Tuesday’s brief moment of relief failed to convince investors. We must now prepare for the index to test the 23,000-point level once again. While theoretical support could be found at 22,900 points, a word of caution is necessary: this area was already cleared out by Monday’s "panic candle." This suggests that there is very little buying volume left in that zone, which could mean the price simply slides through if selling pressure intensifies.
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Forecasts are not guarantees. Rates may change. Political risk is unpredictable. Central bank actions may vary. Platforms’ tools do not guarantee success.