The financial market tends to drastic overreactions, especially when what seems like panic enters the market. What began last week continued into the current trading week. Laboriously gained price increases were wiped out within a few days, and among investors, the feeling of “every man for himself” set in — equivalent to unconditional selling of stocks.
Since the announcement of tariff increases on the day of “liberation,” as Donald Trump phrased it, the German stock index (DAX) has fallen by more than 17 percent at its peak. The volatility index still shows a very high level, though with slight easing, and after Monday’s sharp drop, a counter-movement set in.
A look inside the DAX reveals which industries are most affected — and the picture is surprising.
Broad-Based DAX Shares the Sell-Off Together
In the DAX, the view of the most impacted sectors is quite mixed. Anyone expecting that automotive stocks would lead the list of losers will be proven wrong. The biggest loss of the week was suffered by Sartorius, with a decline of 17.7%. Close behind, Deutsche Bank’s stock came in as the second weakest, down 17.2%, and in third place was MTU Aero Engines from the aerospace sector.
This indicates that the German economy is broadly diversified and thus participates with multiple pillars in the general downward spiral of the financial markets.
Gains in the DAX during this period were limited to Vonovia, up 3.9%, and E.ON, a utility, with a modest increase of 1.2%.
Volatility Measurement Shows Slight Decline and Brings Hope
What should give market participants hope is the fact that Donald Trump has left the door open to negotiations with the international community — as well as the already mentioned slight easing in volatility. Overnight, American indices also calmed down slightly.
A third point that can be drawn upon for perseverance is the historical pattern: sharp sell-offs are often followed by new all-time highs. The question that remains is simply when. That will depend above all on how the international community handles the current situation.
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