Market report: DAX falls in the wake of the Nasdaq

The leading German index fell by around 1.5 percent to 25,920 points in early trading. On Thursday, the DAX first rose to a record high of almost 26,693 points, then things went downhill: in the wake of the turbulence on the US stock exchanges, it finally closed 0.4 percent lower at 26,325 points.

The DAX is also falling far behind in the wake of Wall Street. The Democratic victory has stoked fears of stricter regulation of artificial intelligence (AI) and sent US technology stocks plummeting.

In New York, the Nasdaq 100 technology selection index recorded its biggest daily loss since the Corona crash in March 2020. Ultimately he lost 6.4 percent. The broader S&P 500 lost 4.4 percent, the US leading index Dow Jones fell 3.4 percent. The previous day's gains in the US indices have evaporated.

The focus is on concerns about the future of the AI ​​boom, notes market observer Salah-Eddine Bouhmidi from broker IG. Investors fear that following the Democrats' election victory, stricter requirements could slow down the expansion of data centers and delay projects.

“These political risks coincide with the already simmering uncertainty as to when the billion-dollar investments in artificial intelligence will pay off sufficiently,” said Bouhmidi. "Delays in the expansion could put an additional strain on investors' patience. The stock market is increasingly assessing the possible economic side effects of the new political majority," explains the expert.

Market analyst Jochen Stanzl from Consorsbank points out another circumstance: "Exactly what investors have been fearing for months has happened on Wall Street: that the cluster risk from a few tech heavyweights will take revenge and drag the major indices down with them if they should fall sharply," he comments.

The question is what happens next. Is it just a short-term reaction or is the trend permanent? Some investors could use the lower prices to re-enter the market. At this early hour, there are signs of price gains for US technology stocks on the futures market.

“However, the continued weaker Dow futures show that there are no signs of broad stabilization so far,” says Bouhmidi. In any case, it is questionable whether investors would want to take greater risks before the weekend.

“Long-term investors should not be unsettled by yesterday’s setback,” advises Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank. In the past, election results have rarely had a lasting impact on the stock markets, the expert adds.

The monthly US labor market report, which will be published at 2:30 p.m., could play an important role in the course of the trading day today. “The specifications for this are friendly, if not extremely good,” write the Helaba experts in their morning comment.

Commerzbank analysts also spoke of the “big data highlight from the USA” in their morning briefing. This is usually an indication of the further monetary policy of the US Federal Reserve (Fed).

This report could be decisive for the US Federal Reserve's December interest rate, emphasizes Frank Sohlleder, analyst at broker ActivTrades. "A weak value could dampen the rampant interest rate concerns, but after yesterday's tech crash, it poses an acute risk of sparking real fears of recession."