DAX 30 Closes 2% Lower, As European Stocks Tumble
European stock indices such as Dax 30 and FTSE 100 (UK100) closed another day lower today with Dax losing almost 2%.
European stock indices such as Dax 30 and FTSE 100 (UK100) closed another day lower today. The European Central Bank delivered a 25 basis point rate cut last week, but they’re not committing to anything more than that at the moment, while the FED closed the door for a September rate cut yesterday.
That has left risk assets such as stock markets dry, as traders were expecting central banks to embark on a rate cut frenzy, similar to the rate hike frenzy in the last two years. But that doesn’t seem to be the case, which has got investors worried about an economic slump, with certain indicators showing increasing weakness in the US lately.
Dax 30 Chart Daily – The 50 SMA Finally Gives Way
The sharp declines in major European indices underscore the significant impact of political developments on market sentiment. Besides central banks, the populist parties made some decent gains in the EU elections over the weekend, advancing further in the political spectrum. This might have introduced a new layer of uncertainty, adding to the Central Bank uncertainty, thus prompting a sell-off in European equities.
However, economically the policies of right wing parties are usually better for the economy, and the high rates by central banks are one of the reasons for the election gains. So, they might put pressure to lower rates soon. For now, the focus will be on understanding the potential policy implications and how they might affect the European economic outlook.
Final Closing Numbers for European Indices:
- German DAX: -1.97%
- France CAC: -1.99%
- UK FTSE 100: -0.63%
- Spain’s Ibex: -1.59%
- Italy’s FTSE MIB: -2.18%
The sharp declines across major indices indicate a broad-based retreat from riskier assets. Safe Haven Assets: Investors might seek refuge in traditional safe havens such as government bonds, gold, and possibly the US dollar, which could see inflows as risk aversion increases.
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