The DAX Index Closes 1.66% Lower

The DAX Index dropped 431 points or 1.66 percent on Wednesday to close at 25576 points. Losses were led by Rheinmetall (-4.11%), Siemens (-3.27%) and Infineon (-3.18%).

The DAX 40 deepened losses to close about 1.7% lower at 25,554 on Wednesday, a level last seen in late July, tracking its European peers. The escalation in the Middle East has pushed crude oil prices higher, bringing Brent crude above $100 a barrel, its highest level since last July, further fueling inflation concerns on the eve of the ECB's decision. The central bank is all but certain to raise interest rates from 2.25% to 2.5% on Thursday, with traders focused on the future policy path. Almost all sectors faced pressure, particularly energy-intensive industrials, techs, banks, financials and autos. Defense stocks Rheinmetall and Renk slipped 3.8% and 3.1%, respectively, amid profit-taking. Other top losers included MTU Aero Engines (-3%), Siemens (-2.9%), Heidelberg Materials (-2.8%) and Infineon Technologies (-2.6%). Beiersdorf dropped 2.6% after Deutsche Bank downgraded the stock from “Hold” to “Sell". RWE (1.6%, Qiagen NV (0.4%), SAP (0.4%) and Bayer (0.2%) were the only gainers.

The DAX 40 fell 0.5% to around 25,870 on Wednesday, the lowest level in a week, mirroring a negative sentiment across Europe. The conflict between the US and Iran over control of the Strait of Hormuz has escalated further, pushing oil prices even higher and fuelling concerns over inflation and interest rates. The US military said it destroyed five Iranian crude oil tankers and sank one of them in retaliation for Tehran's attack on a US warship. Meanwhile, the ECB is widely expected to raise rates by 25 bps tomorrow, with further hikes possible before year-end. Energy-intensive industrials and banks were among the hardest hit. Rheinmetall slipped 3%, making it the worst performer, reversing the gains of the prior day. Beiersdorf dropped nearly 2% after Deutsche Bank downgraded the stock from “Hold” to “Sell.” Deutsche Börse declined 1.7% as investors reacted to its plans to issue a €600 million convertible bond to finance general corporate purposes and liabilities.