On Thursday, June 19, 2025, the Dax recorded a significant decline of about 1.1 percent, closing at 23,057 points. This marks the third consecutive trading day of losses for the German benchmark index, corresponding to a level last reached in early May.
Reasons for the Decline
- Political Uncertainty in the Middle East: The ongoing escalation of the conflict between Israel and Iran is causing significant nervousness in the markets. Reports of potential U.S. military actions against Iran further amplify investor concerns.
- Global Market Reactions: Other European indices, such as the Stoxx Europe 600, also fell by nearly 0.8 percent, highlighting widespread uncertainty.
- Interest Rate Policy: While the Bank of England kept its key interest rate unchanged, following the U.S. Federal Reserve, the Swiss National Bank unexpectedly lowered its key interest rate to zero percent – a sign of an increasingly unpredictable global economic situation.
Impact on Investors and Market Strategy
The combination of geopolitical uncertainty and monetary policy volatility is leading to a tense atmosphere in the markets. Investors may feel unsettled, which is likely to be reflected in a more cautious or defensive market strategy.
- The Dax is approaching dangerously close to important technical support levels, such as the 50-day line; short-term supports have already been breached. This could trigger further selling or at least lead to increased caution.
- Experts currently recommend a wait-and-see approach given the unclear political developments in the Middle Eastern conflict and potential further interest rate moves by central banks worldwide.
In summary, the significant decline of the Dax on Thursday primarily reflects the growing uncertainty due to geopolitical tensions in the Middle East and monetary policy uncertainties. These factors are likely to unsettle investors and could lead to more defensive strategies in the stock market in the short term.