German DAX Index Plunges as Geopolitics Fuel Jitters

Erasing the gains from the day before, German equities closed negative on Tuesday after a member of the European Central Bank's Governing Council fueled concerns that ongoing geopolitical situations could discourage the central bank from easing its monetary policy.

Germany's DAX index was 1.44% in the red, joining a regional retreat in Europe and globally.

Market watchers have been closely watching the inflationary trend in the euro area as an indicator of whether the ECB will tighten or ease policy. However, Governing Council member Olli Rehn said Tuesday that the situations in Ukraine and the Middle East will also factor in future interest rate decisions.

Back at home, the ZEW Indicator of Economic Sentiment for Germany increased further in April to 42.9, compared with 31.7 in March.

"A recovering global economy is boosting expectations for Germany, with half of the respondents anticipating the country’s economy to pick up over the next six months. Further contributing to the heightened optimism are the much improved assessments of the situation and economic expectations in Germany’s export destinations. This is reflected, among other things, in the expected appreciation of the US dollar against the euro," said ZEW President Achim Wambach.

For the eurozone, the economic sentiment indicator similarly rose to 43.9 in April from 33.5 in the previous month.

On the corporate front, Beiersdorf BEI added 1.10% at closing after it raised its guidance for organic sales growth to between 6% and 8% for full year 2024. The revision was reported along with the German personal-care products maker's 7.3% organic sales growth in the first quarter to 2.6 billion euros.