Frankfurt, Germany – The Dax index continued its downward trend Monday, closing 2.2 percent lower at 21,892 points, as geopolitical tensions and rising oil prices rattled European markets. The EuroStoxx50 fell by 2.0 percent to 5392, while the euro weakened by 0.7 percent, trading at 1.1486 US dollars.
The decline in European equities mirrored anxieties over escalating conflict in the Middle East and its potential impact on global energy supplies. Brent crude oil reached approximately $112 per barrel, and West Texas Intermediate (WTI) traded around $98. The surge in oil prices comes amid reports of disruptions to energy infrastructure and concerns over the strategic Strait of Hormuz.
Gold and silver also experienced significant losses, with gold falling 5.2 percent to $4261 and silver dropping 6.3 percent to $63.74. This suggests a flight to safety into the dollar, despite broader market uncertainty, according to analysts.
The market reaction follows a weekend of heightened tensions, including threats from U.S. President Donald Trump regarding potential attacks on Iranian energy facilities should Tehran not reopen the Strait of Hormus. Iran has responded with threats of retaliation. These developments have fueled fears of a wider regional conflict and further disruptions to oil supplies.
Adding to the economic concerns, Friedrich Heinemann, an economist at the Center for European Economic Research (ZEW), warned that rising German bond yields are creating substantial financial burdens for the government. He estimates that Germany is heading towards annual interest costs of between 120 and 150 billion euros, a significant increase from previous levels.
The German steelmaker Salzgitter reported a reduced loss for the past year, signaling a potential return to profitability in 2026, but also cautioned that its earnings growth may be at the lower end of previous forecasts. Delivery Hero announced plans to sell its Taiwan business to rival Grab for $600 million, aiming to reduce debt and streamline operations.
Despite the turmoil, some analysts suggest that the Wall Street response has been surprisingly muted. However, the situation remains fluid, and the potential for a delayed reaction in global markets remains a concern. The Bundesgerichtshof (BGH) in Karlsruhe rejected climate change lawsuits against BMW and Mercedes-Benz, ruling that individual companies cannot be assigned CO2 emission limits.
Tesla and SpaceX are planning to build chip factories in Austin, Texas, to address their growing demand for semiconductors, particularly for artificial intelligence applications. The facilities will focus on producing chips for electric vehicles, humanoid robots, and space-based computing.
As of midday trading, market sentiment remains fragile, with investors closely monitoring developments in the Middle East and assessing the potential for further escalation. No immediate diplomatic initiatives have been announced to de-escalate the situation.
