Below 24,000 Points: DAX Plummets Nearly 4% in a Single Day
What began as a deep-red start to the trading week accelerated on Tuesday, leaving the DAX with a staggering deficit of 3.44% by the closing bell. Settling at 23,790.65 points, the index has spiraled far away from the psychologically significant 24,000 mark. Investors are fleeing equities in droves. The war involving Iran continues to weigh heavily on global markets and, by extension, the German leading index. The primary catalyst remains the now-impassable Strait of Hormuz, which is expected to have grave consequences for the global economy. Surging prices for oil and gas are reigniting fears that inflation could flare up once again.
Glimmers of Hope: Beiersdorf, Adidas, and SAP Defy the Trend
Amidst the wreckage, Beiersdorf managed to attract the first bargain hunters on Tuesday. After being sold off by over 9% on Monday, the stock rebounded with a 2% gain, making it the strongest performer in the DAX. It was followed closely by Adidas and SAP, which both managed to rise by 1.9%.
The spotlight will remain on Adidas this Wednesday as the group releases its financial results, drawing significant investor attention. Furthermore, Bayer and Continental are also set to report their earnings mid-week, providing further clarity on the health of Germany's industrial core.
Focus on the Afternoon: US Labor Market Meets Geopolitics
Beyond the headlines surrounding the conflict in the Middle East, market participants will be closely watching the United States this afternoon. The ADP employment data is scheduled for release, serving as a crucial precursor to Friday's official non-farm payrolls. Any signs of weakness in the US labor market could add another layer of volatility to an already fragile environment.
Technical Summary: Bear Market in Full Force
Technically, the DAX looks "deep red," and the downward trajectory could very well continue. The market is showing no signs of stabilization or a bottom forming just yet. This is confirmed by the volatility index (VDAX), which surged by 15% on Tuesday to reach 21.3 points. For the bulls, extreme caution remains the order of the day, while the bears currently hold the upper hand.
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