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DAX rebounds but Europe fears recession

The Dax rebounded slightly this week after falling skittishly for the last month.

At the time of writing, the index stood at 12,784.15, having reached this point after four weeks of bouncing gradually downwards from its last peak, on 6 June, of 14,653.81.

Over on Handelsblatt, Juergen Roeder said that long-term investors were more likely to wait until next week before betting on a decent recovery.

He wrote: “On the German stock market, the recovery continues for the second day in a row. The Dax climbed by 1.6% to 12,803 points at midday, an increase of 210 points. On Monday, the stock market barometer had already gained 1.6% to 12,594 points.

He added: “This means that the German leading index has already made up more than 400 points since the new low for the year at 12,390 points last Tuesday. But it has not yet achieved much with it. From a technical point of view, the Frankfurt benchmark is only showing initial, slight stabilisation tendencies.”

Roeder wrote his analysis shortly before 10.30 German time, after which the index tilted downwards.

This came a day after the UK’s Guardian warned that European stock markets were falling in fear of recessions across the continent, the strain on its economy intensified by rising natural gas prices. The euro also fell to its lowest point against the US dollar in two decades.

Wrote Graeme Wearden: “The single currency fell by 1.5% to $1.025 against the US dollar, the lowest since late 2002. The pound dropped below the $1.20 mark to a two-year low of $1.19, the weakest point against the dollar since March 2020.”

Along with the Dax, which fell 3% on Tuesday, France’s CAC dropped 2.8%.

Raffi Boyadjian, the lead investment analyst at XM, said: “Fears that the energy crisis in Europe is about to get a whole lot worse sank the euro, which plummeted to the lowest since late 2002, crashing below the $1.03 level. Aside from the threat of Russia cutting off gas supplies to Germany and other European importers, a strike at several gas fields in Norway is fuelling the supply concerns.”

Meanwhile, Swiss Re has warned that the US is either in recession or about to enter one.

As I wrote for Reinsurance News yesterday, the firm has joined Berenberg in predicting a recession. In fact, the latter predicted at the end of last month that a ‘shallow recession’ was to hit Europe, the UK, and US across this year and next year.

Buckle up; it’s going to be interesting.

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

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