Düsseldorf. The DAX began the week cautiously after falling slightly on Friday. Following modest gains in the morning, Germany’s benchmark index was trading at around 25,796 points by Monday midday, leaving it almost unchanged.
The index had climbed above 26,100 points on Thursday for the first time since early September, but ended Friday 0.9 percent lower at 25,808 points after four consecutive sessions of gains. Weakness in technology stocks in the United States and Asia weighed on sentiment.
A fresh sell-off in the technology sector followed earnings reports from Amazon and Intel, putting pressure on Wall Street. Rising oil prices and uncertainty ahead of Tuesday’s US midterm elections also unsettled investors. The DAX was affected by the global trend but fell less sharply than technology-heavy US indexes. The Nasdaq 100 recorded its weakest trading day since June and its second-worst session of the year.
The DAX’s comparatively limited exposure to technology stocks helped it weather the sell-off. Thomas Altmann of QC Partners said the index had become a stable alternative for some investors as concerns about technology stocks increased.
Investors are expected to focus closely on the US midterm elections, in which all members of the House of Representatives and roughly one-third of the Senate are elected. The outcome could affect expectations for oil prices and inflation amid concerns about a possible escalation of the conflict involving Iran.
Frank Sohlleder of Activtrades expects many investors to adopt a defensive stance before the vote, saying that they could temporarily stay on the sidelines because of the political uncertainty.
Oil prices fell on Monday despite the election-related concerns. A barrel of Brent crude for January delivery cost $108 in the morning, more than four percent less than on Friday. A media report about diplomatic efforts by US President Donald Trump in the conflict with Iran helped reduce fears of an imminent resumption of American military attacks.
Analysts at ING said the oil market’s next move would depend on geopolitical developments. They noted that investors would assess whether the risk premium linked to the conflict remains high or gradually declines if the midterm elections pass without attacks or an agreement.
German retail sales also surprised markets negatively. Revenue fell 1.5 percent in nominal terms in September compared with August, while sales adjusted for inflation declined by 2.0 percent, according to the Federal Statistical Office. Economists had expected nominal growth of 0.4 percent after a 1.2 percent increase in August.
Alexander Krüger, chief economist at Bank Bethmann HAL, described the figures as a shock at the start of the week and said weak consumer sentiment was having a stronger impact.
The eurozone manufacturing purchasing managers’ index also weakened slightly in October after reaching a multi-year high the previous month. The index fell by 0.2 points to 52.7, according to S&P Global’s second estimate. Investors were additionally awaiting the US manufacturing PMI for October, due after the close of US markets.
Among individual DAX stocks, Fresenius gained around three percent in morning trading. The healthcare group announced a development agreement with Chinese contract researcher and manufacturer WuXi Biologics aimed at expanding its pipeline of generic medicines.
Sources: Handelsblatt.