At the start of the new week, the escalation in the Middle East is weighing heavily on the mood on the stock markets. A new DAX record is once again becoming a distant prospect.
Given the geopolitical uncertainties, the DAX started March with a discount of 2.33 percent at 24,695.44 points. As the trend continues, the German leading index remains in deep red territory and below the 25,000 mark. But the losses are getting smaller.
“We expect an orderly sell-off at the start of the week, but no panic,” said a market participant early in the morning.
Before the weekend, according to “dpa-AFX”, some analysts had expected that new records could follow at the beginning of March. As a result, they even considered a further advance towards 26,000 points to be possible in March, which is also considered a good trading Monday. However, the prerequisite for this would have been that there were no geopolitical disruptive factors. But with the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei in American-Israeli air strikes at the weekend, this is exactly what happened.
DAX record last in January
On January 13th, the DAX reached an all-time high of 25,507.79 points, exceeding the 25,500 point threshold for the first time in its history. Ultimately, it ended the day at 25,420.66 points, which was a new record based on the closing price.
War in the Middle East: Israel and USA attack Iran – Iran strikes back
The US and Israel began massive airstrikes on Iran on Saturday with the aim of a transfer of power in Tehran. The Iranian Revolutionary Guards have responded with attacks on US bases in the region as well as Israel’s army headquarters and a defense complex in Tel Aviv.
However, according to US President Donald Trump, Iran now wants to resume negotiations with the US, just a day after the killing of Islamist regime leader Ayatollah Ali Khamenei. “They want to talk and I have agreed to talk, so I will talk to them,” Trump told the US political magazine The Atlantic. Trump did not give a timetable for talks, although he did say that some of the Iranian officials who were previously involved in talks with the US are now dead.
Oil prices rise sharply
The biggest direct economic consequence of the escalation in the Middle East is likely to be higher oil prices in the short and medium term. In the first minutes of trading of the week, these rose by double digits. Because of the attacks on Iran by the United States and Israel, supplies from the oil-rich Islamic Republic could stop in the near future. However, a far more important factor in the risk of rising oil prices is the situation on the Strait of Hormuz.
Oil prices could continue to rise in the short term, said Norbert Rucker of Julius Baer, according to Dow Jones Newswires. The impact of the Middle East conflict on the global economy depends on the flow of oil and gas through the Strait of Hormuz, according to the head of economics and next generation research. “In the coming weeks, our base case is the usual pattern of a short-lived, but this time more intense, increase in oil and gas prices,” said Rucker.
Oil reacted the strongest, with an increase of around 7 percent in the morning. So there is no sign of panic here either. Cyclical sectors that are most affected by changes in energy prices, such as airlines and chemicals, are particularly suffering on the stock market. On the other hand, armaments is doing better than the overall market, but investors could also now give higher weighting to basic materials.
The attacks on Iran are also driving up the price of gold as a “safe haven”. “Gold remains the clearest gauge of investor fear,” writes eToro’s Josh Gilbert.
Editorial team finanzen.net / dpa-AFX / Dow Jones Newswires
