FRANKFURT (DEUTSCHE-BOERSE AG) - June 19, 2025. FRANKFURT (Goldberg & Goldberg). Since our last sentiment survey, very few people would have expected the discussions about trade tariffs to be overshadowed by a completely different issue: the Israeli-Iranian war, which has been dominating the headlines since June 13. According to the latest survey by Bank of America (BofA), the mood among international fund managers regarding the global economy, recession, and inflation had normalized to a level last seen before the so-called US Liberation Day on April 2, but now much may be perceived differently. This is also because the survey was completed one day before the war began.
It is therefore not surprising that the DAX suffered a loss of 2.3 percent compared to the previous week. Although the majority of institutional investors we surveyed already had reservations about the DAX's "too positive" performance up to last Wednesday and were correspondingly skeptical, the mood has deteriorated further. Our Frankfurt Stock Exchange Sentiment Index fell by 10 points to a new low of -25. Not even the bear camp has risen particularly strongly again – we measure an increase of 2 percentage points – but this time it was the optimists who got cold feet. The bull camp has fallen by 8 percentage points. In other words, three-quarters of the bulls willing to change their minds have simply joined the ranks of neutral investors – possibly not entirely of their own volition.
No profit-taking
On the other hand, the pessimists who had just switched to the bearish side in the previous week (15 percent of all respondents) were, at best, temporarily guided by profit-taking. What was initially seen in some quarters as merely a temporary setback in the stock market barometer for quick profits now seems to have turned into genuine fear. This is particularly true as our Frankfurt Stock Exchange Sentiment Index has fallen to its lowest level since February.
There was also a massive shift in sentiment among private investors. The Frankfurt Stock Exchange Sentiment Index in this panel fell by 13 points to the neutral 0 line. Interestingly, it was primarily investors surveyed via social media who reversed their bullish view by 180 degrees to become bearish. We must not forget that, unlike other private investors, this subgroup had been decidedly bullish for most of this year. The latter probably even saw a few purchases during the weakness, but the bottom line is that little has changed in this subgroup's prevailing pessimism.
Home-grown DAX weakness
Overall, however, it should be noted that despite the geopolitical events, the volatility of the DAX has not increased dramatically. But the temporary decline of the stock market barometer by 3 percent did not lead to profit-taking by the bears; in some places, book profits may even have been higher. From a behavioral perspective, the refusal to realize profits of this magnitude can primarily be explained by new fears that are apparently greater than the urge to take the chips off the table.
Incidentally, the recent performance of the DAX seems to be primarily home-grown. This is because international fund managers' interest in eurozone stocks has hardly waned. At least in the latest BofA survey, a net 34 percent (previous month: 35 percent) of asset managers said they were overweight in eurozone stocks.
Today's survey offers at least a glimmer of hope, as domestic demand potential for the DAX has risen significantly over the past two weeks. This potential will come to bear most strongly – and possibly quite violently – once the initial effects of habit have begun to wear off.
by Joachim Goldberg
June 19, 2025, © Goldberg & Goldberg for boerse-frankfurt.de
(Deutsche Borse AG is solely responsible for the content of this column. The articles do not constitute an invitation to buy or sell securities or other assets.)
