FRANKFURT (dpa-AFX) - Investors continued to watch developments in the oil market with trepidation on Monday. The escalating situation in the Middle East pushed the Dax to a ten-month low in early trading. However, pressure eased somewhat during the morning as a debate over the release of oil reserves was triggered.
The benchmark Dax index initially slipped well below the 23,000-point mark after the price of a barrel of North Sea Brent crude soared to nearly 120 dollars overnight. Relief then came from a report in the "Financial Times" stating that G7 nations are to discuss a possible release of petroleum reserves. The price of a barrel of Brent subsequently returned toward the 100-dollar mark.
Against this backdrop, the Dax was also able to reduce its daily loss, which had reached as much as 2.8 percent. Most recently, the lead index was still 1.6 percent lower at 23,206 points. The MDax fell by 2.4 percent to 28,766 points. The Eurozone's leading index, the EuroStoxx 50, lost about two percent.
A swift end to the Iran war remains unforeseeable. The situation in the oil markets is driven by fears of a prolonged closure of the Strait of Hormuz, which is of enormous importance to the global oil market as a transport route. Market focus was on Iran appointing a new Supreme Leader in the son of the slain Ayatollah Ali Khamenei.
"The start of the week is intense. After the non-trading period over the weekend, the market is hitting back with full force once again," experts from Index-Radar wrote in the morning. Investors are pricing in the scenario of a long-lasting conflict and concerns over a renewed inflationary impulse driven by rising energy prices.
In such phases, according to the Index-Radar specialists, it is worth taking a step back. "Panic has rarely been a good advisor on the stock market," their commentary continued. The experts are betting that the conflict will be defused soon or at least limited enough for energy prices to drop significantly again. Every further day increases the political pressure on Washington to push for a solution, they wrote, also with an eye on the upcoming midterm elections in the USA.
The fluctuations triggered by the oil price were evident on Monday across many energy-intensive industrial sectors with the usual burdens, while shares of major European oil companies such as BP or Shell were in demand. Stocks in the steel sector, for example, were under heavy pressure.
In the tourism industry, investor fear regarding the impact of high fuel prices also remains palpable. Lufthansa shares fell by nearly five percent to a low since November. The fact that Barclays Bank abandoned its negative rating for the airline provided little relief. The analyst had written his study before the latest oil price rally.
Investors were able to achieve gains in the defense sector. While Rheinmetall titles managed a two percent plus, Hensoldt stood out particularly with a 5.6 percent increase. They were supported by a buy recommendation from the research house Jefferies. Expert Ben Brown justified this by stating that the annual targets for free cash flow appeared conservative in light of incoming orders from Germany.
In the defense industry, investors also looked at a successful stock market debut by the company Gabler on Monday. Shares of the submarine supplier started at 47.20 euros, above their issue price of 44 euros, which had been in the upper half of the offering range. Most recently, investors paid 47.60 euros to acquire the shares.
Gea Group shares could not escape the weak market environment, as shown by the recent 0.7 percent decline. Analysts noted that the machinery manufacturer confirmed previously published preliminary data with the results presented. The margin target range for this year was viewed slightly positively, as its midpoint lies somewhat above expectations.
A rebalancing within the Dax index family was completed on Monday. However, neither the shares of auto supplier Schaeffler nor those of tool manufacturer Einhell could benefit from their promotion to the MDax and SDax, respectively. The changes are related to the fact that the real estate group Deutsche Wohnen, previously included in the MDax, no longer meets the requirements for minimum free float./tih/nas
