Stocks in DAX index plummet below 24,000, triggering panic selling among investors
The global stock market has been facing a wave of uncertainty as investors grapple with a complex interplay of geopolitical tensions, energy supply constraints, and trade policy uncertainties. This is particularly evident in the performance of the DAX, MDAX, and EuroStoxx 50 indices in Germany and Europe.
In Switzerland, trading was halted due to a holiday, reflecting a broader trend of market volatility. Market participants are increasingly skeptical about the second half of the year, with gloomy economic prospects, disappointing corporate earnings, and new trade concerns looming.
Weak signals from US markets added to the gloom, with Amazon disappointing with its results and falling by eight percent. This downturn extended to US heavyweights, leading to losses and uncertainty in Europe. Apple managed to impress with the iPhone, but it wasn't enough to boost tech sentiment, further fuelling market uncertainty.
Several companies in Germany have cut their annual targets, adding to the concerns. Daimler Truck fell nearly nine percent, while Bechtle also saw significant losses. However, Bayer's stock was one of the few gainers in the DAX, rising 2.8 percent, thanks to its strong performance in the area of crop protection and seeds. Rheinmetall's potential remains enormous.
The European Union imposed fresh sanctions on Russian crude oil exports and its energy trade due to the conflict in Ukraine. This created supply concerns and price volatility in energy markets. Additionally, OPEC+ agreements to gradually increase oil production from August 2022 onwards raised concerns about a global oil glut, impacting commodity prices and market sentiment.
Markets showed some relief from fears of escalating trade tariffs as new tariff measures were expected to be avoided or eased in the period. This helped support equity gains in European indices, including the EuroStoxx 50 and German indices.
Better-than-expected quarterly earnings reported by many companies globally supported some upward momentum in equity indices like the DAX and MDAX in July 2022. However, by the end of the month, the DAX lost 2.66% to 23,425 points, returning to late June levels. The international trade situation remains a concern, with the US under President Trump imposing tariffs of up to 39% on Switzerland.
Investors pulled back from risk assets on Friday, with the MDAX of mid-cap stocks losing 2.2% and the EuroStoxx 50 falling by nearly three percent. Cancom's stock lost more than 11 percent.
As we move into the second half of 2022, it is clear that the stock market will continue to be influenced by these key factors. Investors will need to navigate this complex landscape with caution, as geopolitical tensions, energy supply constraints, and trade policy uncertainties continue to shape the market's trajectory.
Finance experts are cautious about the second half of the year, as investing in business becomes more challenging due to the complex interplay of geopolitical tensions, energy supply constraints, and trade policy uncertainties. The downturn in US markets, with companies like Amazon and Apple underperforming, has extended losses and uncertainty to Europe.
With signals from US markets, the European stock market, including the DAX and MDAX, remains volatile. Traders are closely monitoring geopolitical developments, energy supply issues, and trade policy decisions to make informed investment decisions.
