The German benchmark DAX slipped 1.1% on Tuesday to close at 25,970.11 points, extending a recent pullback after briefly dipping below 26,000 last week. The September decline follows a historically weak seasonal pattern for European equities.
Market analysts cited a confluence of factors weighing on sentiment, including elevated valuations, shifting interest-rate expectations, and rising oil prices. "After the recent rally, investors are seeking a new equilibrium between high valuations and changing interest-rate outlooks," said Timo Emden, market analyst at CapTrader. Geopolitical risks, policy uncertainty, and surging oil prices are prompting investors to reduce exposure, he added.
The MDax of mid-cap stocks fared worse, dropping 1.68% to 32,173.26 points, as heavy losses in defense names such as Renk, ThyssenKrupp Marine Systems (TKMS), and Hensoldt weighed on the index. Defense shares have been particularly sensitive to geopolitical developments.
Oil prices extended gains on Tuesday, driven by escalating military tensions between the U.S. and Iran and disruptions to Russian oil infrastructure in Ukraine. The conflict has tightened diesel supplies, further supporting crude prices. High oil prices and rising bond yields—amid expectations for a European Central Bank rate hike next week and growing odds of a Federal Reserve increase in September—added to equity market headwinds.
In corporate news, fragrance and flavor producer Symrise approached its annual high after Jefferies initiated coverage with a buy rating. The company also announced the sale of its U.S. terpene ingredients business to private equity firm Mutares.
Pharma and technology group Merck gained 0.5% following a buy recommendation from HSBC, while IT services firm Cancom rose 2.3% after announcing a share buyback. GFT Technologies surged 3.8% to its highest level since summer 2024 after Berenberg upgraded its rating. Hugo Boss advanced 1% after major shareholder Frasers said it would increase its stake to more than 50%. In contrast, OHB shares fell 8.7%, with traders citing stretched valuations.
The Euro Stoxx 50, the broader eurozone benchmark, declined 0.8% to 6,368.98 points. London’s FTSE 100 slipped slightly, while Switzerland’s SMI edged higher. U.S. equity futures pointed to weaker trading in New York, with the Dow Jones Industrial Average and Nasdaq 100 under pressure.
