The bleeding continues after a terrible period last week, which saw major indices in Europe wipe out their year-to-date gains in just a matter of days. That even after having hit fresh record highs in the week before the US-Iran conflict starting up. Here's a snapshot for the day and how it all factors in since the war started:
- Germany DAX -2.4% (-9.1% since 27 Feb)
- France CAC 40 -2.4% (-9.1% since 27 Feb)
- Spain IBEX -2.5% (-9.5% since 27 Feb)
- Italy FTSE MIB -2.5% (-8.8% since 27 Feb)
That is a lot of pain to deal with in a short span of time. The chart for French stocks looks to be one that is taking an escalator up before the elevator down:
The drop since the end of February now brings the French benchmark index to its lowest since September last year. That after having shown much resilience in brushing off political concerns and fiscal risks towards the end of last year. Now, everything is just being reset.
It's not as bad for the other major indices on the charts. However, it is worth keeping an eye out for German stocks next. The DAX index looks like it might be on the verge of breaking down. And if that happens, it could start to trigger even more pain in stocks across Europe as investors have to dig deep in trying to ride out the Middle East conflict.
The key line in the sand is that 23,000 level at the moment. If that breaks more meaningfully, it will be tough to pick at support levels next for German stocks.
That especially since the surge in oil and gas prices is weighing across multiple sectors, stretching from airlines to autos, and even the likes of financials and chemicals/manufacturing.
