FRANKFURT (dpa-AFX) - Israeli airstrikes on nuclear facilities and other targets in Iran caused sharp losses on the DAX on Friday. At the close of trading, the German benchmark index was down 1.07 percent at 23,516.23 points. This marked its sixth consecutive day of losses and a weekly decline of 3.2 percent. Just last week, the DAX had reached a record high of 24,479 points.
Experts at ING Economics warn that a further escalation of the new Middle East war could push oil prices above US$80. The US Federal Reserve is expected to keep interest rates unchanged anyway. These events are likely to confirm the Fed in its stance. The monetary authorities will decide on their future monetary policy on Wednesday evening.
"The Fed will once again not give in to Donald Trump's push for the first key interest rate cut this year," writes Robert Greil, chief strategist at Merck Finck. This is because, although US inflation was again below market expectations in May, its further development remains uncertain.
"Apart from the not particularly detailed trade deal with the UK, further real deals are still pending despite all the announcements made by the US administration," said Greil. "This means that the Fed is still missing a key piece of the puzzle to be able to accurately assess the future inflation trend." He also considers an interest rate cut at the meeting at the end of July unlikely – "it will probably only come at the next meeting in September."
Other stock indices also felt the effects of investor risk aversion before the weekend. The MDax index of medium-sized companies fell by 1.52 percent to 29,742.09 points on Friday. The Eurozone's leading index, the EuroStoxx 50, also continued its downward trend, falling by 1.3 percent. Zurich saw a similar decline, while London recorded only a moderate drop. The New York benchmark index, the Dow Jones Industrial, lost around one percent at the end of European trading, and the technology-heavy Nasdaq 100 index fell 0.6 percent.
