After a failed recovery attempt earlier this week, investors are exercising caution and reducing their risks. The DAX briefly dropped below 18,100 points, threatening to slide into a summer slump. Bears are back in control of the stock markets: stocks are being sold off, pushing the DAX down by as much as 1.1 percent to 18,098 points by late morning. This decline follows yesterday’s failed recovery attempt, where the DAX, despite an initial surge to 18,461 points, managed to close with only a slight gain.
Is the DAX Heading for a Summer Slump?
“The bottom line is that the German stock index remains stuck in its sideways range between 18,000 and 18,350 points,” explains Jürgen Molnar from broker RoboMarkets. “It seems as though investors are just waiting for truly bad news to cash out further. There’s a lot to suggest that the market is heading for a summer slump.”
France Remains an Uncertainty
Much now depends on the further developments in France, where the second round of parliamentary elections is scheduled for this Sunday. If the right-wing National Rally (Rassemblement National, RN) fails to secure an absolute majority, it could have a positive effect on the financial markets, according to portfolio manager Thomas Altmann from wealth management firm QC Partners. “However, it will take longer to see how and how well France can be governed after the new elections,” Altmann adds.
