Stock Market: DAX Ends with a 0.6% Drop - Pessimism Over Federal Policies and Rising Gas Prices Affects Mood
In the financial world, the German stock index, DAX, started the day on a downward trajectory and continued to lose ground in the afternoon. The index closed at 24,277 points, down 0.6 percent from the previous day's close.
The DAX's weakness was influenced by a combination of factors. Geopolitical tensions, particularly trade war concerns and political uncertainty in France, played a significant role. The ongoing U.S.-EU tariff threats, which impact Germany's export-dependent automotive sector and trade-sensitive industries, were a major concern.
Domestic issues also contributed to the downturn. Weak German consumer confidence, as indicated by surveys showing declining sentiment and rising fears of job losses, reduced expectations for a strong economic rebound. Sector-specific pressures also played a role, with defensive sectors like utilities and pharmaceuticals outperforming, while banking and autos faced weakness far worse than the overall market.
The price of a barrel of North Sea Brent crude significantly rose, with a barrel now costing $66.62, an increase of 83 cents or 1.3 percent from the previous trading day's close. Meanwhile, the price of a megawatt-hour (MWh) of gas for September delivery increased by 3 percent, now costing 32 euros.
The European common currency was stronger in the afternoon. One euro now costs $1.1660, and one dollar is equivalent to €0.8576. The consumer price of electricity, assuming the gas price level remains at this point, is estimated to be around 8 to 10 cents per kilowatt-hour (kWh) including ancillary costs and taxes.
Looking ahead, further signals are expected on Friday when Federal Reserve Chair Jerome Powell delivers his speech at the central banker meeting in Jackson Hole. The minutes from the latest interest rate meeting of the US Federal Reserve, scheduled for release in the evening, are also being eagerly awaited. These communications will likely provide critical insights into the Fed's future monetary policy path, which influences global risk sentiment and capital flows affecting the DAX.
The minutes could reveal the Fed's stance on interest rates and inflation outlook, signaling whether further tightening is expected or if a more dovish tone is emerging amid global uncertainties. Powell's speech is expected to clarify the Fed's priorities on balancing inflation control with growth, which may ease or heighten market volatility depending on the tone. Since the ECB recently signaled a dovish policy, any divergence in Fed policy—as signaled in the minutes and speech—could impact currency valuations (euro vs. dollar) and cross-border investment flows influencing the DAX.
In summary, the DAX's weakness reflects a complex interplay of geopolitical risks, weak domestic sentiment, sectoral vulnerabilities, and technical caution. The Fed's communications will be closely watched as potential catalysts that could either stabilize or further unsettle the market depending on indications about future U.S. monetary policy direction.
Read also:
- Deepwater Port Construction Permits for Projects within the South Central Region's Air Regulations
- Citizen Thekla Walker, Minister, urges: "Let's face our responsibilities at home"
- Editorial Correspondence: Justifying the Elimination of a Program Earmarked for Reducing Our Own Carbon Footprint?
- Investment of $20 million in an eco-friendly ammonia production facility in Africa by SA-H2 fund
