Investors fear conflagration
DAX is as bad as it was last in 2011
October 20, 2023, 6:46 p.m
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Investors fear that the conflict between Israel and Hamas could drag other nations into war. The DAX therefore ends this trading week with a loss and extends its series of losses. The mood in the second and third rows of the German stock market is really bad.
Fears of a further escalation of the Middle East crisis accelerated the decline on the European stock exchanges on the last trading day of the week. The DAX fell well below the psychologically important mark of 15,000 points and recorded a weekly loss of 2.6 percent. “As long as the war rages in the Middle East and the risk of intervention by other states cannot be ruled out, investors will not want to burn their fingers with stocks,” summarized Jürgen Molnar, capital market strategist at RoboMarkets.
The leading German index was 1.6 percent weaker at 14,798 points. The EuroStoxx50 fell just as sharply. Both indices thus marked their lowest levels in seven months. The MDax of medium-sized companies fell by 1.52 percent to 24,065 points. Things also went downhill on Wall Street.
DAX bad, MDAX worse
Due to the renewed discounts, the DAX extended its losing streak to five weeks. The last time there was an even longer dry spell of six negative weeks in a row was in 2011. However, the mood is really bad in the second and third rows of the German stock market. While the DAX is still up a good 6 percent for the year, the MDAX is already down over 4 percent.
Investors fear that the conflict between Israel and Hamas could spread into a conflagration. Israel responded to the surprise major attack by Hamas almost two weeks ago with air strikes and a closure of the Gaza Strip. Recently there have been increasing indications of an imminent ground offensive. At short notice, Egypt invited people to a peace summit on Saturday, which Federal Foreign Minister Annalena Baerbock is also scheduled to take part in.
You can follow all developments in the Middle East in our live ticker.
Oil more expensive again
The situation on the oil market, where the North Sea variety is located, remained correspondingly tense Brent and US oil WTI each rose by around one percent to $93.20 and $90.28 per barrel. Since the Hamas attack, oil prices have shot up by around ten percent as investors fear supply shortages in the event of a further escalation. “The crisis has the potential to fuel inflation again through rising energy prices and thus deter central banks from making the interest rate cuts that are eagerly anticipated for 2024 and are urgently needed for a recession-prone global economy,” said Molnar.
Recent statements by US Federal Reserve Chairman Jerome Powell also fit in with this. “Anyone who expected to take a less hawkish tone given the recent rise in yields was in for a disappointment,” said Michael Hewson, market analyst at CMC Markets.
Ten-year yields on the bond markets were scraping US bonds at the five percent mark, reaching a fresh 16-year high. The interest on the Federal bonds At 2.933 percent, it was within reach of its two-week high reached on Thursday.
Dürr crash
Across Europe, stocks from the travel and leisure sector fell. Papers from InterContinental lost around 4.5 percent in London after the hotel group’s quarterly net growth slowed. Shares in the MDax were flying Skinny from the depots after the machine and plant manufacturer received its margin target for the coming year. The titles fell by 16.1 percent.
We also experienced a black day SMA Solar, which fell by 8.9 percent. The US company’s quarterly figures were met with disappointment SolarEdge caused problems for the solar technology company. Lost at default values Sartorius 6.8 percent. The laboratory and pharmaceutical supplier presented its nine-month figures on Thursday – as a result, the titles had gained up to nine percent.
The busy reporting season provides a new insight into the economic situation. Coming from the DAX next week Porsche, VW and Mercedes Benz three automobile companies present their figures. The European Central Bank is also meeting, where the key interest rates are expected to be confirmed. Despite the high returns, it is pleasing gold currently very popular, an ounce recently cost 1,882 euros.