FRANKFURT (dpa-AFX) – European investors are facing a rude awakening as they return from the weekend, with the escalating conflict in Iran weighing heavily on markets. However, the DAX appears to be avoiding the massive collapse feared earlier this morning. Broker IG currently estimates the German benchmark index will open 2.3 percent lower at 23,050 points, nearly two hours before the Xetra start. Earlier, a low of 22,705 points suggested a plunge to levels not seen since last spring; now, it represents a low since November.
The rapid surge in energy prices remains a primary shock, increasingly fueling concerns over inflation and economic growth. Iran has appointed a new Supreme Leader, yet the son of the slain Ayatollah Ali Khamenei is already facing threats from Israel and the U.S. A swift end to the war and a normalization of regional oil production appear nowhere in sight.
The geopolitically driven flight from risk continues, noted JPMorgan investment strategist Mislav Matejka. However, he reminded investors that the stock market typically finds its floor when sentiment is at its lowest. Accordingly, Matejka would not be surprised if the sell-off concludes this week or next./ag/zb
