Conflict in the Middle East weighs on DAX - investors fear further escalation

Conflict in the Middle East weighs on DAX - investors fear further escalation

Investors are concerned about the ongoing conflict between Israel and Hamas and fear it could draw more countries into war. This has resulted in the DAX recording a loss and continuing its losing streak. The mood is particularly bad in the second and third tiers of the German stock market. Fears of an escalation of the Middle East crisis have led to a significant decline in prices on European stock exchanges. The DAX fell well below the psychologically important mark of 15,000 points and recorded a weekly loss of 2.6 percent. Investors are cautious and are staying away from stocks for the time being as the war in the Middle East continues and other states could intervene. This assessment comes from Jürgen Molnar, capital market strategist at RoboMarkets.

The DAX closed trading with a loss of 1.6 percent at 14,798 points, while the EuroStoxx50 also fell significantly. Both indices reached their lowest levels in seven months. The MDax, the index for medium-sized companies, recorded a decline of 1.52 percent to 24,065 points. Prices also fell on Wall Street.

The DAX has extended its losing streak over the last five weeks. The last time there was such a long negative development was in 2011. However, the mood is particularly bad among companies in the second and third tiers of the German stock market. While the DAX is still recording growth of a good 6 percent over the year, the MDAX is already down over 4 percent.

Investors fear that the conflict between Israel and Hamas could escalate into a conflagration. Israel responded to Hamas's surprise major attack almost two weeks ago with air strikes and a closure of the Gaza Strip. There are indications of an imminent ground offensive. Egypt has invited people to a peace summit at short notice, in which German Foreign Minister Annalena Baerbock is also scheduled to take part.

This tense situation is also reflected in the oil market. The North Sea variety Brent and the US oil WTI rose in price by around one percent to 93.20 and 90.28 dollars per barrel, respectively. Since the Hamas attack, oil prices have risen by around ten percent as investors fear supply shortages due to a possible further escalation. This could lead to inflation rising and central banks postponing their planned interest rate cuts for the global economy into 2024.

Yields on ten-year US bonds are also approaching the five percent mark, reaching a 16-year high. The interest rate on federal bonds is close to its two-week high of 2.933 percent.

Across Europe, stocks from the travel and leisure sector posted losses. InterContinental shares fell about 4.5 percent in London after the hotel group's quarterly net growth fell. Dürr shares fell 16.1 percent in the MDax after the mechanical and plant manufacturer lowered its margin target for the coming year. SMA Solar also recorded a share price decline of 8.9 percent due to disappointing quarterly figures from the US company SolarEdge. Sartorius lost 6.8 percent in value.

Several automotive companies such as Porsche, VW and Mercedes-Benz will present their figures next week. The European Central Bank will also meet and is expected to confirm key interest rates. Despite the high returns, gold is currently very popular; an ounce recently costs 1,882 euros.

According to a report by www.n-tv.de