Nervous stock market traders are plunging DAX into the negative
A Forgettable Start to the Week: The DAX's Year-to-Date Gains Have Nearly Vanished. Various Factors Put Pressure on the German Benchmark Index Throughout the Day. Other Indices Also Suffered Losses.
The continued decline in U.S. markets and a sell-off in Japan further weighed on the German stock market. Additionally, the boom surrounding Artificial Intelligence (AI) received another setback. Investor nervousness increased, reaching levels not seen since the COVID-19 crisis.
In the end, the DAX closed down 1.82% at 17,339.00 points, recovering from its intraday low of around 17,025 points. However, it remains the lowest level since February for the German stock market index. In the three trading days since early August, the DAX has lost more than six percent. Currently, only 3.5% of its year-to-date gains remain.
Technology stocks in Asia suffered, particularly due to a report that Nvidia, the leading AI chipmaker, is delaying the introduction of new chips due to defects. Nvidia had been a significant beneficiary of the AI boom and triggered this year's rally on the U.S. tech exchange, Nasdaq.
The fear of a U.S. recession also affected stocks below the DAX. The MDAX of mid-cap stocks fell 2.04% to 23,964.39 points at the start of the week. The SDAX, which at one point dropped by nearly 6%, fell by 2.62%. Mid- and small-cap companies often have a strong dependence on the economic cycle.
Infineon as the Winner
It was also gloomy on stock exchanges in Europe and the U.S. The EuroStoxx 50 lost 1.45% to 4,571.60 points. The stock exchanges in Zurich and London also fell sharply. In the U.S., the Dow Jones Industrial and the Nasdaq exchanges fell by more than 2% at the close of European trading.
While there were mostly losers in the DAX, Infineon gained 1.3% after a volatile day. The Munich-based company's business improved slightly in the third quarter, allowing it to break the downward trend of the previous quarters. Despite the challenging environment, the chipmaker also reaffirmed its annual targets.
Continental, the auto supplier and tire manufacturer, is considering spinning off its auto supply division. If the split happens, it would be the most comprehensive corporate action to date, but it also makes clear capital market sense, commented Jefferies analyst Michael Aspinall on the plans. The stock fell by 1.2%.
The sell-off in Japan and the continued decline in U.S. markets also impacted SDax companies, contributing to their losses during the trading day. Due to the delayed introduction of new chips due to defects, Nvidia, a significant player in the SDax index, experienced a setback, affecting the performance of other AI-focused companies in the index.
