DAX in Freefall: Over 5 Percent Loss in Four Days – Is a Crash Looming?
The sell-off in the DAX knows no bounds: within just four trading days, the German leading index lost over 5 percent in the face of a potential record high. Driven by massive selling on the US market, triggered by fears that the Federal Reserve would postpone further rate cuts, the DAX slid another 1.74 percent yesterday, Tuesday. The closing price was a mere 23,180 points. Suddenly, the all-time high is a distant prospect, and a drop below the critical 23,000-point mark is absolutely within the realm of possibility.
ECB Pours Fuel on the Fire: Warning of "Unprecedented Shocks"
In addition to US rate concerns, the ECB unsettled the market. It warned banks of "unprecedented shocks" and geopolitical risks that are higher than ever before. Although EU banks are considered robust, this warning particularly pressured financial stocks. Shares of Deutsche Bank and Commerzbank found themselves among the top 3 weakest performers in the DAX yesterday, alongside Siemens Energy.
Historical Chance or Downtrend: Hope from the Past
A look at recent DAX history could offer encouragement: similar impulsive sell-offs of over five percent in a short time, unsupported by surprising news (like tariffs), often led to a strong recovery in the past and, in autumn, frequently marked the final start of the written-off year-end rally.
Crucial Test at June Low: DAX Before Downtrend Activation
The leading index is currently standing at the decisive June low, testing the last bastion before a deeper fall. Technically, breaking below this support would equate to the activation of a downtrend and exiting the long-term trading range. Today, Wednesday, will be decisive for whether the DAX can stabilize above 23,000 points, or if investors will be forced to take significant losses.
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