The nervousness on the European financial markets is high, investors are withdrawing more and more. There are particularly high losses in bank stocks. On the foreign exchange market, the euro falls to a fresh 20-year low.
Concerns about inflation, interest rates and the economy weighed on the stock markets in the middle of the week. The Dax fell below the 12,000 point mark for the first time since November 2020 and was at times more than two percent lower at 11,863 points. By the afternoon, the leading German index had made up for part of the losses and was only 0.4 percent down at 12,080 points. Since the interim high a good two weeks ago, the stock market barometer has lost around ten percent. In view of the energy crisis and inflation, consumer sentiment in Germany, which has fallen again, paints a bleak picture for the future. The barometer of the GfK market researchers in Nuremberg signals a surprisingly strong decline for October.
There were heavy price losses in bank values, as shown by the temporary minus of more than seven percent for Deutsche Bank papers at the end of the Dax. The money house and its fund subsidiary DWS are asked by US authorities to pay for the use of unauthorized communication channels and have to pay a fine of 125 million dollars. A total of 16 Wall Street institutes are affected. The banks were also affected by the ever-increasing economic slowdown in Europe. With a discount of almost six percent, the Commerzbank share also went down. The Polish subsidiary M-Bank will also charge the financial institution in the third quarter for an additional provision in the equivalent of around 490 million euros.
Things also looked bleak in the steel industry because of an industry study by the US bank JP Morgan, which is pessimistic about profitability in the carbon steel sector. Thyssenkrupp stocks fell by almost eleven percent in the M-Dax, the paper of the Salzgitter Group, which is more focused on steel, even slipped almost 12 percent down in the S-Dax. On Wall Street, the leading US index, the Dow Jones, rose slightly to 29,195 points shortly after trading began.
Meanwhile, the flight from government bonds continued, which in turn made government financing costs more expensive. At 2.352 percent, the yield on ten-year German government bonds marked the highest level in almost eleven years. Ten-year US Treasuries returned 4.019 percent, the highest since the 2008 financial crisis. Yields are being driven by the rising interest rates of central banks around the world, which are noticeably tightening the reins of monetary policy in the fight against inflation.
The dollar continued to gain strength in the foreign exchange market. The greenback, which is also considered a reserve currency worldwide, received a boost from the general uncertainty and the tight monetary policy of the US Federal Reserve. On the other hand, the euro is burdened by the energy crisis in Europe and the weak economic prospects. The common currency fell as low as $0.9537. This is the lowest level in over 20 years.