FRANKFURT (dpa-AFX) – The Dax index fell sharply on Tuesday. After reaching a record high in early trading, just ten points below the round 19,000 mark, the German leading index collapsed along the way. US economic data released in the afternoon kept up the pressure. The Dax ended the session with a loss of 0.97 percent to 18,747.11 points. The MDax for mid-caps fell by 0.92 percent to 25,405.46 points.
The morale of the American industry improved in August, although less than analysts expected. Fears of a phase of economic weakness in the industry should ease somewhat, according to the Landesbank Hessen-Thüringen. A further acceleration in interest rate cut forecasts is not to be expected.
Market participants expect the US Federal Reserve (Fed) and the European Central Bank (ECB) to cut their key interest rates in September. As for the Fed, many are wondering whether a 0.25 percentage point cut will be enough or whether the central bank will dare to take a big step forward with a 0.5 percentage point cut. The monthly US employment report on Friday will determine the extent of the expected rate cut, according to Helaba.
The prospect of a rate cut has kept investors in good spirits, but after the sharp rise in prices in recent weeks, the market is clearly overbought, said analyst Konstantin Oldenburger of broker CMC Markets. The thought of how fast the decline will be in early August is still fresh in the minds of some investors. “If strong labor market data on Friday were to push back a U.S. rate cut again, a repeat of the events could not be ruled out,” he worried./ajx/jha/.
