Customs dispute escalates, causing DAX to plummet; Thyssenkrupp shares face strain and stress
In the ongoing global trade conflict, gold, often referred to as a "crisis currency," rose 0.4 percent to $1,284.46 per troy ounce (31.1 grams). This increase reflects investors' growing unease as they seek safer assets.
The escalation of trade conflicts, particularly between the U.S. and EU, has had a significant impact on European stock markets. Initially, European stock futures including DAX and EuroStoxx 50 surged by around 1.2-1.3% on optimism about a potential U.S.-EU trade deal. However, concerns about its asymmetrical nature and adverse impact on European economies caused a reversal. The deal is expected to slow eurozone growth by about half a percentage point, equating to a €75 billion hit to GDP.
The euro dropped 1% as a result, and Germany’s DAX led European markets lower due to fears of substantial economic damage and job losses in export-dependent sectors. The EuroStoxx 50, which has industrial and energy exposure, was also affected by energy prices and supply chain disruptions.
In the bond market, the U.S. dollar weakened slightly as trade prospects improved, lifting the euro and other currencies. Geopolitical uncertainty has driven investors toward safe havens like gold and the Swiss franc, though this is more a hedge against broader geopolitical risks than direct trade-war effects.
The search results did not provide direct information on media mergers or tobacco stocks in relation to the trade conflict escalation. However, market-wide uncertainty and sector-specific disruptions typically influence merger activity and consumer sectors differently, with defensive sectors like tobacco sometimes showing resilience in volatile periods.
Unemployment risks have increased, especially in export-driven industries, as highlighted by European trade unions warning of significant job losses post-deal. Eurozone industrial output has contracted more than expected recently, reflecting these pressures.
In the commodity markets, steel companies, often sensitive to tariff changes on industrial goods, face pressure from these trade tensions and resulting industrial slowdown. ArcelorMittal, the world's largest steelmaker, announced further production cuts.
Cigarette sales declined by over 11 percent in May, and shares of British American Tobacco and rival Imperial Brands fell by up to 3.4 percent. On the other hand, ProSiebenSat.1 shares rose 3.1 percent after Mediaset, the media conglomerate of former Italian prime minister Silvio Berlusconi, secured nearly 10 percent of its shares.
Investors flocked to Spanish and Portuguese bonds, which yielded plus 0.734 and 0.871 percent respectively, the lowest ever. The yield on ten-year German bonds fell to a three-year low of minus 0.174 percent.
The unexpected rise in German unemployment occurred, and Thomas Gitzel, chief economist of VP Bank, stated that the record run on the German job market ended, slowing down the usual spring recovery in the economy. The Dax and EuroStoxx50 each lost around 1.5 percent, reaching 11,843 and 3,296 points respectively.
David Madden from online broker CMC Markets said that given the recent escalation of the trade conflict, hopes for a swift resolution are fading. Mediaset fell 1 percent in Milan, while Thyssenkrupp shares lost 3.9 percent to €11.63.
The Brent crude oil price fell 2.6 percent to $68.29 per barrel (159 liters). No information about gold, the euro, the Swiss franc, German bonds, Spanish and Portuguese bonds, German unemployment, or the Dax and EuroStoxx50 were mentioned in this paragraph. The shares of the world's largest steelmaker, ArcelorMittal, fell by up to 7.3 percent in Amsterdam to a three-year low of €13.10.
In conclusion, the ongoing trade conflict and subsequent partial resolutions have created short-term volatility and sector-specific risks in Europe’s DAX and EuroStoxx 50 indices, with broader ripples across global financial and commodity markets. The overall effect involves slower growth, increased economic uncertainties, downward pressure on exports and industrial production.
Investors may turn to industries like finance and business as they seek safer assets amidst escalating trade conflicts, such as the one between the U.S. and EU, due to their potential for stability and resilience in volatile periods. The uncertainty created by these trade conflicts can also affect investing decisions in sectors like the commodities market, where steel companies might face pressure due to tariff changes on industrial goods.
