Investor sentiment in Germany continues to waver as geopolitical tensions and an upcoming U.S. Federal Reserve decision weigh heavily on the markets. On Wednesday, the DAX extended its correction phase, with risk-averse investors pulling back amid concerns over a potential U.S. military intervention in the Middle East and the Fed’s interest rate announcement later in the day.
DAX Bears Take the Reins
By midday, the DAX had dropped by as much as 0.6%, hitting an intraday low of 23,288 points. This places Germany’s benchmark index nearly 1,200 points below its all-time high of 24,479 — a clear indication that the long-anticipated correction is underway. Technical analysts are now watching a key support zone between 23,300 and 23,400 points. If the DAX closes below this range, market watchers fear that the broader outlook could deteriorate significantly.
Mounting Pressure on the Fed
Beyond Middle East tensions, the focus is firmly on the U.S. Federal Reserve’s policy decision expected at 8 p.m. South African time. According to CME Group’s Fed Watch Tool, an overwhelming 99.9% of market participants expect the Fed to hold its key interest rate steady within the current 4.25% to 4.5% range.
Still, the pressure to cut rates is building. Former U.S. President Donald Trump has called for a full percentage point cut, amplifying expectations that monetary easing could be on the horizon. Slower-than-expected inflation figures and a slight easing in trade tensions support the case for a looser stance, particularly amid geopolitical instability.
Fed Projections May Disappoint
Investors are eagerly awaiting the Fed’s updated economic forecasts — especially the “dot plot” indicating future rate paths. The key question remains: Will the central bank stick to its projection of two rate cuts in the second half of the year? Commerzbank FX strategist Antje Praefcke warns that disappointment could be imminent, noting that markets have become “fixated on the Fed sounding dovish.”
Muted U.S. Market Outlook
Ahead of the Fed announcement, U.S. markets are showing a cautious tone. Futures for the Dow Jones Industrial Average were down 0.1% at the time of reporting, after the index slipped 0.7% in the previous session.
Oil Prices Rebound Slightly
Oil markets added a touch of volatility to the midday trading session. After a weaker start suggesting easing supply concerns, Brent crude has reversed course, edging up 0.1% to $76.50 per barrel. The uptick may add fresh pressure on equities already grappling with broader macroeconomic uncertainties.
Gold Retreats From Weekly High
Meanwhile, the price of gold dipped 0.2% to $3,380 per ounce by midday, putting the safe-haven asset roughly $70 below its weekly high. Despite the decline, gold remains a go-to option for investors seeking stability in times of geopolitical risk.
Airbus Soars on Dividend Promise
Amid the broader market downturn, Airbus shares bucked the trend to become the DAX’s standout performer. The aerospace giant announced plans to boost shareholder returns, pledging to distribute 30–50% of its net income as dividends going forward — up from its previous 30–40% payout range. The move signals confidence in its long-term profitability and was met with enthusiasm from investors.