Dax starts in positive territory despite Trump's tariff threat and falling oil prices

Dusseldorf. A tariff threat from US President Donald Trump against the EU cannot initially affect the leading German index on Thursday. The Dax starts trading 0.6 percent up at 25,682 points. On Wednesday he had gained around half a percent to 25,537 points.

Trump responded to the EU's push to make Canada the first "associated member" of the European Union with a harsh threat. If he perceived it as a “hostile act,” he would impose high tariffs or stop trade with Europe in many areas, Trump warned reporters. Investors are therefore turning their attention to Canadian Prime Minister Mark Carney, who will speak to the European Parliament in Strasbourg this morning.

The recent driving force behind the rising prices was a fall in the price of oil. And prices continue to fall on Thursday too. At the start of trading in Frankfurt, North Sea Brent crude oil for delivery in November costs around $104 per barrel (159 liters), 1.6 percent less. The US light oil WTI for delivery in October is also cheaper by 1.3 percent to around 101 dollars. Both contracts had already fallen by around three dollars on Wednesday.

The reason for this was reports about alternative delivery routes for oil exports from Saudi Arabia, which were able to dampen concerns about the extent of the supply bottlenecks caused by the Iran war. Previously, the important oil pipeline to the Red Sea, an alternative route to the Strait of Hormuz, was damaged in drone attacks. As the financial news agency Bloomberg reports, the country wants to restore around half of its capacity within a few days.

Following this latest escalation in the conflict, oil prices rose to their highest level in four months earlier this week.

However, Jochen Stanzl, chief market analyst at Consorsbank, warns against excessive optimism. The falling price should not obscure the fact that “oil prices, at over $100 per barrel, are still a fifth higher than they were a month ago.” The situation in the Middle East is like a powder keg: “All it takes is one piece of news and the unrest and rising oil prices are back.”

US President Donald Trump again promised an early end to the conflict on Wednesday. According to a report by the news portal Axios, Trump wants to meet with the heads of state and government of the Gulf states on Tuesday on the sidelines of the UN General Assembly.

Yesterday's interest rate decision by the US Federal Reserve (Fed) also remains interesting. The Fed raised the US key interest rate by 0.25 percentage points for the first time in three years. The interest range is therefore 3.75 to 4.00 percent. Since the announcement was only made after the German stock market closed, the decision is only expected to have a full impact on the Dax today.

“The central focus of investors is now on classifying the rhetorical signals regarding the future interest rate line: Do market participants see the increase as a one-off step or as a prelude to further interest rate increases later in the year?” says Frank Sohlleder, analyst at ActivTrades.

There is also another key interest rate decision coming from the Bank of England. Unlike the ECB and the Fed, however, economists suspect that the central bank in London will leave the key interest rate at 3.75 percent despite the recent high inflation.

The dollar hits a seven-week high following the Fed's interest rate hike on Thursday. The dollar index peaked at 100.37 points, its highest level since the end of July. The greenback has gained around 1.3 percent since the beginning of the week. Fed Chairman Kevin Warsh sounded more hawkish than expected, said Carol Kong, currency strategist at the Commonwealth Bank of Australia. “The fact that he gave hints about future interest rate hikes surprised the markets.” That drives up the dollar.

Meanwhile, German mechanical and plant engineering appears to be continuing to weaken. The industry association VDMA lowered its production forecast for 2026 to a minus of two percent on Thursday. Until now, the association had assumed stagnation. “2026 is expected to be the fourth year in a row with a decline in production,” said VDMA chief economist Johannes Gernandt.

The reason for this is the weak development in the current year. In the first seven months, real production fell 4.1 percent below the previous year's level. The capacities remained significantly underutilized. The trend reversal planned for 2027 is fraught with considerable risks. These included high geopolitical uncertainties, increased interest rates and the weak competitiveness of Germany as a location.

Bayer: The Leverkusen-based pharmaceutical company Bayer has received an extension of approval for its kidney drug Kerendia in the USA. The US Food and Drug Administration (FDA) has approved its use for another group of patients. Kerendia is one of the company's top-selling drugs. The shares rose by 0.7 percent on the Frankfurt Stock Exchange.