"Positions remain far apart regarding the definition of a ceasefire or peace, but the market welcomes the fact that talks are taking place at all," said Rodrigo Catril, strategist at National Australia Bank. "Meanwhile, attacks continue on both sides." Jochen Stanzl, chief market analyst at Consorsbank, also expressed skepticism. According to the expert, the price increases are driven not only by speculative buying but also by the partial unwinding of hedges and profit-taking by short sellers. In March, the DAX lost approximately 10%, and it has been on a zigzag course since the beginning of last week. On Friday, it reached its lowest closing level in nearly a year at 22,331.
OIL MARKET LOSSES REMAIN CONTAINED
Despite the shift in sentiment, losses in the oil market remained limited. Brent North Sea crude and US light crude WTI both eased by around 2% in mid-week trading. However, prices had surged by more than 50% each during March. "Oil market participants do not seem to trust the geopolitical outlook just yet," said Christian Henke, chief analyst at broker IG. Furthermore, experts suggest that oil supply is likely to remain tight even if the conflict ends, due to infrastructure damage. "It will take time for shipping costs, insurance, and tanker movements to normalize," said Priyanka Sachdeva, chief analyst at broker Phillip Nova.
Nevertheless, a sell-off in the energy sector hit the equity markets. Laggards included companies such as Maurel & Prom, Equinor, and Repsol, with declines ranging from 3% to 5.6%. Eni, BP, and TotalEnergies also came under pressure, posting losses of approximately 2% to 3%. Conversely, hopes for lower fuel prices propelled airline stocks higher. The European aerospace and defense index headed for its largest daily gain in about a year, rising by 4%.
ECONOMIC OUTLOOK IN FOCUS
Economic data also took center stage. Due to the fallout from the Iran conflict, leading economic research institutes have significantly lowered their forecasts for the German economy for this year and next. "The energy price shock is hitting the recovery hard," said Timo Wollmershäuser, head of forecasts at Munich's Ifo Institute. In contrast, sentiment was bolstered by a surprising increase in the Eurozone Manufacturing Purchasing Managers' Indices (PMI) for March. "Despite rising price pressures, the war has so far had little impact on factory activity," wrote experts at Capital Economics.
The afternoon will see the release of the US Manufacturing PMI for last month and US retail sales for February. Additionally, the monthly report from private payroll provider ADP will provide a preview of the official US labor market report, scheduled for release on Friday.
Among individual German stocks, shares of shopping center investor Deutsche Euroshop came under pressure, falling by over 3%. The company concluded the 2025 fiscal year with revenue and earnings in line with expectations. However, according to one trader, the 2026 guidance disappointed investors.
(Report by Sanne Schimanski, edited by Christian Rüttger. For inquiries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economics) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)
