FRANKFURT (dpa-AFX) - Economic and inflation fears fueled by the war in Iran have handed the Dax its worst week since the U.S. tariff storm in April 2025. Adding to the gloom, dismal U.S. labor market data further stoked economic uncertainty. The German benchmark index fell nearly one percent on Friday to close at 23,591.03 points, resulting in a weekly loss of 6.70 percent.
Just a week ago, the Dax had come within 100 points of its record high of 25,507 set in January. However, the joint U.S. and Israeli strike on Iran upended investor sentiment.
The MDax, which tracks mid-cap stocks, closed Friday with a daily loss of 0.7 percent at 29,482.78 points. The Eurozone's leading index, the EuroStoxx 50, fell by over one percent. Markets in London and Zurich also saw significant declines. At the European close, the U.S. Dow Jones Industrial Average was trading roughly one percent lower, as was the tech-heavy Nasdaq 100.
"Investors got cold feet following disappointing U.S. jobs data and ahead of a potentially eventful weekend, continuing their retreat from equities," said Andreas Lipkow of broker CMC Markets. He noted that the situation in the Middle East shows no signs of improvement, and there is currently no prospect of a swift end to the U.S. and Israeli military campaign against Iran.
Meanwhile, U.S. President Donald Trump has demanded an "unconditional surrender" from Iran. While U.S. assessments suggest the country's military capabilities have been significantly weakened by the attacks, the Iranian leadership is attempting to expand the conflict across the Middle East, targeting oil and gas infrastructure in the Gulf states. Furthermore, maritime traffic in the Strait of Hormuz – a critical bottleneck for global oil and gas trade – has come to a near-total standstill, according to the Joint Maritime Information Center (JMIC).
The resulting surge in oil and gas prices carries significant inflationary risks, which grow the longer the conflict persists. However, experts remain cautiously optimistic for now that the situation can be managed. Robert Greil, Chief Strategist at private bank Merck Finck, assumes a relatively short conflict of no more than three months in his base-case scenario. "A much faster end to the war seems unrealistic to us, but a much longer duration, including a months-long closure of the Strait of Hormuz, also seems unlikely as things stand today," Greil explained.
In light of geopolitical uncertainty, defense stocks were once again in high demand. Rheinmetall led the Dax with a gain of nearly 3 percent. In the MDax, shares of tank transmission manufacturer Renk surged by over 7 percent. Submarine builder TKMS and defense electronics specialist Hensoldt also posted strong gains.
At the bottom of the MDax, Lanxess shares plummeted by more than 17 percent. The preliminary failure of the sale of its remaining stake in the Envalior joint venture reignited shareholder concerns regarding the specialty chemical group's financing.
In the wake of Lanxess, Wacker Chemie saw its share price drop by 7.7 percent. The decision by financial investor Advent not to proceed with the purchase of the remaining Envalior shares from Lanxess at this time is also a negative signal for Wacker Chemie, explained industry expert Chetan Udeshi of JPMorgan. He noted it underscores the difficult environment in which cyclical chemical companies are currently operating.
In the Dax, Infineon shares slid nearly 7 percent to the bottom of the index after analysts at Swiss bank UBS downgraded their rating from "buy." This continued the chipmaker's correction since its multi-year high in late February. While analyst Francois-Xavier Bouvignies remains optimistic in the medium term, he sees immediate risks that could limit upside potential, noting that the AI revenue target through 2027 leaves little room for outperformance.
Bolstered by several positive analyst comments, DHL shares stabilized following significant losses the previous day, rising by over half a percent. The disruptions in freight markets caused by the Iran war could benefit the logistics giant due to its large, flexible network, wrote expert Muneeba Kayani of Bank of America. On the previous day, an outlook clouded by geopolitical uncertainty had spooked investors./mis/jha/
--- By Michael Schilling, dpa-AFX ---
