FRANKFURT (dpa-AFX) - Investors on the German stock market continue to watch developments in the oil market with trepidation. The escalating situation in the Middle East pushed the Dax below the 23,000-point mark in early Monday trading, hitting a ten-month low. However, pressure eased as a debate regarding the release of oil reserves was initiated.
By the afternoon, the Dax stood at 23,303 points. It managed to limit its decline to 1.2 percent, after having fallen by as much as 2.8 percent in early trading. The MDax dropped 2.1 percent to 28,877 points in the afternoon. The Eurozone's leading index, the EuroStoxx 50, lost 1.4 percent.
After the price for a barrel of North Sea Brent crude surged to nearly 120 dollars overnight, a report from the "Financial Times" provided relief, suggesting that G7 nations are set to discuss a possible release of petroleum reserves. Consequently, the price per barrel of Brent returned toward the 100-dollar mark.
According to experts at Bankhaus Metzler, a diplomatic solution to the conflict is moving "further and further out of reach." The situation in the oil markets is driven by fears of a prolonged closure of the Strait of Hormuz, which is of vital importance to global oil trade. Markets also focused on the fact that Iran has appointed a new Supreme Leader in the son of the slain Ayatollah Ali Khamenei.
According to experts from Index-Radar, investors are pricing in concerns over a renewed inflationary impulse from rising energy prices alongside the scenario of a long-lasting conflict. In such phases, they suggest it pays to take a step back. However, they warn against panic, which is "rarely a good advisor" on the stock market. The experts are betting that the conflict will be defused soon or at least contained enough for energy prices to drop significantly again.
The fluctuations triggered by oil prices were evident on Monday across many energy-intensive industrial sectors, which faced the usual pressures, while shares of major European oil companies such as BP and Shell were in demand. Shares 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 six percent to their lowest level since November. The fact that Barclays Bank abandoned its negative rating for the airline provided little relief, as the analyst had written the study prior to the latest oil price rally.
Investors were able to secure gains in the defense sector. While Rheinmetall shares managed a plus of nearly three percent, Hensoldt stood out particularly with a 5.4 percent increase. They were supported by a "buy" recommendation from the research firm 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 watched a mixed market debut for the company Gabler on Monday. Shares of the submarine supplier started at 47.20 euros, above their issue price of 44 euros. However, after approaching the 50-euro mark, profit-taking set in, recently pushing the price slightly below the allocation price.
Gea Group shares performed better than the Dax, as indicated by the price recently holding at the previous day's level. Analysts noted that the machinery manufacturer confirmed previously published preliminary data with its presented results. The margin target range for this year was viewed slightly positively, as its midpoint lies somewhat above expectations.
A reshuffling within the Dax index family was completed on Monday. However, neither the shares of automotive supplier Schaeffler nor those of tool manufacturer Einhell were able to benefit from their promotion to the MDax and SDax, respectively. These changes are related to the fact that the real estate group Deutsche Wohnen no longer meets the requirements for minimum free float./tih/stk
