Stock Exchange: Dax with Heavy Losses after Attack on Israel

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Escalation in the Middle East: Fears of a new oil price shock weigh on the Dax

Photograph:

Frank Rumpenhorst / dpa

The Dax has suffered losses again after the recent recovery at the beginning of the week. The attack on Israel by the terrorist organization Hamas is weighing on the German stock market. Oil prices are rising sharply. On the other hand, the surprisingly significant decline in German industrial production in August provided little impetus on the bottom line.

The Dax recently fell by 0.8 percent to 15,105 points. On Friday, the German benchmark index had been able to curb its weekly decline with significant gains after the monthly US labor market report. The MDAX of medium-sized companies lost 0.7 percent to 25,229 points. The Eurozone benchmark index Eurostoxx 50 fell by almost 1 percent.

Two days after the massive attack on Israel by the Islamist Hamas, the fighting continues. The Israeli Air Force bombed more Hamas targets in the Gaza Strip, while the U.S. moved an aircraft carrier and other warships to the eastern Mediterranean in response to the conflict. Experts said there could be a new geopolitical risk for the financial and commodity markets. In addition, the annual meetings of the World Bank and the International Monetary Fund (IMF) on the global economy and inflation are scheduled to kick off the week.

Industrial production in Germany fell for the fourth month in a row. In August, total production fell by 0.2 percent compared to the previous month, according to the Federal Statistical Office. Compared with the same month last year, production fell significantly by 2.0 percent in August.

Armaments and oil in demand

The dramatically heated conflict in the Middle East is leaving its mark on some individual stocks. For example, the armaments stocks of Rheinmetall and Hensoldt jumped up by double digits in some cases. They thus recovered more than half of their correction from the September high. Oil stocks are also strong.

Meanwhile, there was a significant downward trend for the shares of airlines such as Lufthansa and the shares of the tourism group Tui. The entire travel and leisure sector is under pressure. Lufthansa reduced its flight schedule to and from Tel Aviv.

In the German market, Vitesco was the focus of Schaeffler's takeover bid. The automotive supplier, whose owner family already holds almost 50 percent of the powertrain specialist through a holding structure, is offering the other Vitesco shareholders 91 euros per share in cash. In connection with the proposed transaction, Schaeffler also intends to convert its preference shares into ordinary securities with voting rights. While Vitesco shares jumped by around 20 percent to 90.55 euros at the top of the MDax and reached a record high, Schaeffler, the biggest loser in the SDax small-cap index, slumped by 7.6 percent.

U.S. stock markets up for the weekend

An unexpectedly strong U.S. labor market report did not have a lasting impact on the New York stock exchanges on Friday, with the leading Dow Jones Industrial index rising by 0.9 percent to 33,407 points at the close of trading. The tech-heavy Nasdaq 100 climbed back above the round mark of 15,000 points in late trading and closed slightly below it at 14,973 points, up 1.7 percent.

Mixed picture in Asia

Stock markets in Japan and South Korea remained closed for the holiday. Hong Kong's benchmark index was up 0.6 percent after a delayed opening due to the foothills of the recent typhoon. The Shanghai stock exchange fell by 0.7 percent. The index of major companies in Shanghai and Shenzhen lost 0.6 percent.

Oil prices rise

The attacks on Israel by the radical Islamic group Hamas are causing uncertainty about the consequences of the fighting for the oil-rich region. As a result, oil prices have risen sharply. They climbed by more than 4 percent. The price of North Sea Brent rose by 4.7 percent to 86.65 dollars (81.86 euros) per barrel (159 liters). The price of West Texas Intermediate (WTI) climbed by 4.5 percent to $88.39 per barrel.

The new escalation in the Middle East comes at a time when oil prices have been rising recently. The major producers Saudi Arabia and Russia have reduced their production volumes.

With news agencies