FRANKFURT (dpa-AFX) - Hopes for a swift end to the conflict in Iran and a subsequent sharp decline in oil prices provided a significant boost to the German stock market at the start of April. The Dax extended its recovery from the beginning of the week, climbing 2.73 percent to 23,298.89 points, marking a total gain of nearly 5 percent since Monday. In March, the German benchmark index had slumped by around ten percent due to the Middle East conflict and the explosion in oil prices.
The MDax, which tracks mid-cap stocks, ended Wednesday's session 3.75 percent higher at 29,205.84 points. Gains were recorded across Europe and in the US. The Eurozone's leading index, the EuroStoxx, rose 2.93 percent to 5,732.71 points.
US President Donald Trump stated that United States strikes in Iran would conclude within two to three weeks. He suggested the country would need "maybe two weeks, maybe a few days longer." These remarks pushed oil prices down significantly, tempering inflation expectations.
On the commodities market, Brent crude for June delivery briefly fell below the closely watched 100 US dollar per barrel mark. By early evening, the barrel was trading slightly below 102 dollars.
Investors who had previously pulled the plug due to high oil prices and their impact on the economy and inflation are now returning to the market, said Andreas Lipkow, Chief Market Analyst at broker CMC Markets. "Fearing they might miss another leg of the relief rally, they are becoming active now, thereby accelerating the Dax recovery." Nevertheless, Trump's words once again left "room for speculation." Lipkow continues to believe anything is possible, "from a diplomatic solution to further escalation and the deployment of ground troops in Iran."
With the exception of the oil and gas sector, all sectors in Europe posted gains. Chemical stocks, which had recently benefited from expectations of tightening global chemical supplies, gained only slightly. In the Dax, BASF was the weakest performer, falling 2.8 percent. In the MDax, Lanxess and Evonik were among the weakest stocks. In the SDax, biofuel producer Verbio and sugar group Südzucker came under pressure; both had risen sharply following the outbreak of war in the Middle East.
In contrast, Rheinmetall continued its recovery, surging 9.5 percent. The stock was bolstered by a study from Goldman Sachs. The US bank added the shares to its "European Conviction List" of particularly promising European stocks. Analyst Sam Burgess considers the Düsseldorf-based defense contractor the top pick in the sector. Rheinmetall is benefiting from the European rearmament cycle, which he views as a structural theme after three decades of neglected investment. He noted the company has the right geographic exposure and the right product mix to address Europe's largest defense gaps.
Elsewhere in the MDax, Renk rose 8.2 percent and Hensoldt gained 9.4 percent. TKMS shares jumped nearly 15 percent, buoyed by an analyst note from Citigroup. Charles Armitage issued a "buy" recommendation for the submarine manufacturer.
Shares of Adidas and Puma resisted the disappointing outlook from US rival Nike. Adidas gained 0.2 percent. According to Andreas Lipkow, Puma's 5.5 percent rise was likely driven by old takeover speculation alongside the generally positive market sentiment. At Nike, the transition phase appears to be lasting longer than originally expected, wrote RBC expert Piral Dadhania in light of the US sportswear manufacturer's statements regarding the new year.
Bucking the strong market trend, Nordex shed 1.5 percent. US investment bank Bank of America retracted its "buy" recommendation for the wind turbine manufacturer's stock following its strong price increase since the beginning of the year./ck/he
--- By Claudia Müller, dpa-AFX ---
