Germany’s flagship DAX index closed marginally lower on Tuesday, shedding 0.15% to finish at 25,402.28 points after an early sell-off drove it more than 1% below its opening level — the weakest intraday point since late June — before a partial recovery.
The MDAX, which tracks mid-cap companies, rose 0.25% to 31,135.75. Outside Germany, the EuroStoxx 50 fell 0.38% to 6,236.50, the UK’s FTSE 100 and Switzerland’s SMI also declined, and the Dow Jones Industrial Average lost nearly 1% by European close.
A modest easing in oil prices and a drop in bond yields provided some support, while German Chancellor Friedrich Merz (CDU) signaled the government would act to ease the burden of high fuel prices. Speaking at the BGA trade association’s entrepreneur day, Merz said, “We expect that we will have to act.”
Investors remained cautious ahead of the Federal Reserve’s policy decision on Wednesday. Timo Emden, chief market analyst at CapTrader, said the DAX remained tied to oil prices and that traders were “trapped in a triangle of high energy prices, fears of restrictive monetary policy and geopolitical risks.”
Defense stocks outperformed amid reports that Japan could raise military spending from nearly 2% to 3.5% of GDP under U.S. pressure, alongside supply-chain concerns in America. Rheinmetall shares rose 3.2%, leading the DAX, while TKMS gained 2.2%.
European steel stocks rallied on news that leading Chinese producers have called for stricter output curbs and inventory drawdowns, according to a WeChat post by the China Iron and Steel Association cited by Bloomberg. Salzgitter led the MDAX with a 5.3% jump, well ahead of Thyssenkrupp’s 1% gain.
The chemicals sector extended a two-week slide following negative analyst commentary. JPMorgan lowered its price target for Lanxess over energy-cost headwinds, while Morgan Stanley’s Lisa De Neve downgraded Evonik from overweight to equal-weight, citing only average total return potential versus peers. Lanxess fell 2.6% and Evonik dropped 2.9%.
Deutsche Bank shares lost 2.4% after Bank of America CEO Brian Moynihan said he expected trading revenues to remain “relatively unchanged” compared with the third quarter of last year, adding pressure to an already weak U.S. banking sector.
