Frankfurt-listed shares extended their decline on Tuesday as elevated oil prices and renewed concerns about the pace of artificial-intelligence development weighed on sentiment. The DAX fell 0.4% to 25,335 points after touching its lowest level in more than seven weeks, while the MDAX of mid-cap companies also lost 0.4% to 30,945. The Euro Stoxx 50, the benchmark for major European stocks, declined 0.4% as well.
Oil prices remained high overnight. Michael Pfister, a currency strategist at Commerzbank, said that after the advance by the Houthis in Yemen, a level of $110 per barrel is being considered. That kept attention on Wednesday's Federal Reserve decision, where investors largely expect a rate increase. Andreas Lipkow, an analyst at CMC Markets, said energy prices remain the biggest risk factor if oil stays at current high levels, adding that effects on consumption, the economy and inflation rise steadily above $100. He noted that the Middle East geopolitical situation still shows no signs of easing.
The sell-off in artificial-intelligence and semiconductor stocks on Monday, driven by fears that AI development may slow, was not followed by a meaningful recovery. Confidence in the sector therefore remained damaged.
The chemicals sector continued its two-week slide after critical analyst comments. JPMorgan cut its price target for Lanxess, citing headwinds from energy costs. Morgan Stanley analyst Lisa De Neve downgraded Evonik from Overweight to Equal-weight. Lanxess shares fell to their lowest level since March and lost 5.3%. Evonik dropped 2.8%, while BASF and Brenntag declined 1.6% and 2.2%, respectively.
European bank stocks were pressured by weak US cues. The European sector index fell 1.3%, and Deutsche Bank shares, down 2.1%, were among the weakest in the DAX. They continued to correct from the previous week's highest level since 2011. Commerzbank shares were more resilient, rising 0.1%, supported by the UniCredit takeover.
Schott Pharma shares saw their initial strength fade during the session. They last traded 2.0% higher after at one point jumping 5.5% to their highest level in more than a year. JPMorgan initiated coverage of Schott Pharma with an Overweight rating and a price target of 27.10 euros, praising the company's profit-growth potential.
Cewe said it plans to buy back up to 150,000 of its own shares for up to 18 million euros, equivalent to about 2% of its share capital. The shares rose 2.1%. Engine maker Deutz raised fresh capital by issuing more than 15.26 million new shares, generating gross proceeds of about 179 million euros. Management said the proceeds are intended to strengthen financial flexibility for future growth opportunities. Deutz shares fell 4.0%.
