Against the background of the worsening situation in the Middle East, the German stock market did not have a consistent direction at the start of the trading month of June.
On Monday, the DAX opened the new trading month of June marginally 0.09 percent lower at 25,083.24 points. In further XETRA main trading, the stock market barometer is working its way into green territory.
Investors continue to believe that a peace agreement in the Iran war is more likely than an escalation.
Quiet start to the week
Last week, the German benchmark index rose to 25,438 points in hopes of a peace agreement between the USA and Iran. However, this prospect received no new support over the course of the week, and so the DAX moved away from its record high in January.
Iran war remains a risk
The Iranian Revolutionary Guards reported a retaliatory strike after a US airstrike. The Gulf state of Kuwait had previously raised the alarm about air strikes. The US military said it bombed radar and drone control centers in Iran over the weekend after Tehran was said to have shot down an American drone. The USA and Iran have been struggling for days to reach a framework agreement to extend the ceasefire that has been in effect since April 8th.
“The Iran conflict remains unresolved, but hope continues to prevail on the financial markets. While the political reality is still characterized by open questions, investors are already turning their attention to a possible peace in the Middle East,” commented market analyst Timo Emden.
Market strategist Mislav Matejka from JPMorgan continues to see a favorable relationship between opportunities and risks on the stock market in the second half of the year. Despite the records in the MSCI World UCITS and MSCI Emerging Markets Index, the market is still far from being valued for the optimal case.
Technical tailwind for DAX
The upward momentum from Whit Monday is currently giving the German stock market a technical tailwind, wrote asset manager Ortay Gelen from Axia Asset Management. If the diplomatic signals from the Middle East become more concrete and oil prices remain stable, the record high from mid-January is likely to be seriously attacked – which in turn could trigger follow-up purchases.
However, the situation remains fragile, Gelen continued: “The resistance area between 25,400 points and the record high is historically significant – if the DAX fails here again, profit-taking is inevitable.” An unexpected setback in the Middle East negotiations could also quickly change the mood.
Calm on the corporate front
From a company perspective, things are very quiet in terms of news. Mercedes-Benz shares could be worth a look. As the Bloomberg news agency reports, citing insiders, a bill has been introduced in the US Senate that would ban the import, sale and use of connected vehicles and key components from China and other foreign “US enemy states”.
This should also apply to car manufacturers that are more than 15 percent owned or controlled by Chinese investors or players. The measure could lead to a ban on Mercedes-Benz sales in the United States because the company is partially owned by China. The bill is far from becoming law and is likely to undergo changes, but could at least weigh on market sentiment, one trader commented this morning.
DAX record last in January
The distance from the record level on the German stock market has hardly changed. On January 13th, the DAX reached an all-time high of 25,507.79 points. Ultimately, it ended trading that day at 25,420.66 points, which also set a record based on the closing price.
Claudia Stephan, Melanie Schürmann, Alexandra Hesse, finanzen.net editorial team with material from dpa-AFX and Dow Jones Newswires