A look back at the beginning of the year illustrates the extent of the stock market correction.

On January 5, the third day of trading, the Dax had climbed to its high for the year at 16,272 points.

After that it went downhill.

This week, the leading index fell below the 12,000 point mark.

Even the attempt to recover on Friday morning fizzled out again in the early afternoon.

The mood is now at a low point.

The fear of recession is spreading among companies, as the business climate index of the economic research institute Ifo has shown.

Markus Fruehauf

Editor in Business.

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The economic downturn is almost certain, only the extent is still open.

Added to this is the escalating inflation, which reached the 10 percent mark both in Germany and in the euro area in September.

Inflation in the double-digit range was last measured in Germany in the early 1950s, and it was the first time in the euro area.

In the meantime, the fight against historically high inflation has become a crucial issue for the credibility of the central banks.

The threat of significant interest rate hikes is also reflected in the yield curves on the bond market.

That for US Treasuries is inverse, meaning short-term rates are higher than long-term rates.

The two-year US yield is 4.2 percent and the 10-year is 3.7 percent.

The yield curve for federal bonds has also flattened significantly. At 2.1 percent, the ten-year yield is not even 0.3 percentage points above the two-year yield.

Inverse or flattening yield curves are seen as a recession signal on the markets.

The short end is driven by the expectation of imminent rate hikes, while the long end is priced in again falling interest rates due to the recession.

But until then, the recession will remain the dominant theme on the stock exchanges.

And for stocks, the prospects will initially remain very bleak.

Commerzbank strategist Andreas Hürkamp cites the prospect of further interest rate hikes by the American Federal Reserve and the European Central Bank (ECB) as the reason for this.

"The risk is increasing that the Dax will even fall below the low of 11,500 index points we have forecast for the second half of the year in the coming months," he warns in his weekly outlook.

A glimmer of hope remains: once the mood has hit rock bottom, things can only go up.