At the start, the DAX gained 0.97 percent to 13,557.44 points. However, it then came under pressure, profits dwindled and the leading German index is now slightly in the red. The 13,500 point mark, which he had regained at the start, continued to fall over the course of the course, and at times the stock market barometer slipped below the 13,400 point mark.
The interest rate and economic concerns associated with persistently high inflation had put the leading index under strong pressure, especially in the past two trading days, and within a week it had lost almost 1,300 points.
Central banks’ strategies for combating inflation
The experts at LBBW wrote that there are currently fears of interest rates and recession around the world. “Concerns about sharper interest rate hikes in the USA are creating a bad mood on the stock, interest rate, foreign exchange and crypto markets and are also causing the euro to depreciate significantly against the US dollar.”
The weal and woe of the stock markets currently depends on the central banks and the tricky task of combating high inflation without harming the economy. The interest rate decision is on the agenda in the USA on Wednesday: Experts at the investment bank Goldman Sachs now even expect interest rates to rise by 0.75 percentage points and another of the same amount in July. Market expectations are now also likely to be in this dimension.
“For better or for worse, the stock market has to get used to the path of prolonged monetary policy tightening,” said market observer Jochen Stanzl from CMC Markets. “Given the danger that inflation in the US is getting out of hand and the Fed is being accused of having acted too late, it could now oversteer, which in turn could trigger a recession,” continued Stanzl. He sees the fact that shares were sold at high volume for the second trading day in a row on Monday as an indication that large investors are radically restructuring their portfolios. Investors have recognized that the Fed no longer has the luxury of taking its time and this is the reason for the sell-off since Friday.
ZEW Index published
The ZEW index, which reflects the mood of the German stock market professionals, was also on the schedule for the morning. Their economic expectations brightened again somewhat in June. The expectation index compiled by the Center for European Economic Research (ZEW) rose to minus 28.0 points (May: minus 34.3 points).
Editorial office finanzen.net / Dow Jones Newswires / dpa-AFX
Image sources: Julian Mezger for Finanz Verlag