Global financial markets are under a lot of pressure. This is mainly caused by a massive increase in energy costs. On Tuesday, the main European stock market indexes showed clear price drops. The German leading index, the DAX, was particularly affected. At times, it lost over 700 points and fell below the 18,000 point mark. Market observers mainly point to worries about a lasting energy crisis and what that means for the global economy for this development.
In the commodity markets, prices for fossil fuels shot up. The price for European natural gas rose to over 50 Euros per Megawatt hour at the Amsterdam stock exchange. At the same time, Brent crude oil became much more expensive. This increased investors' fears about inflation. Meanwhile, in Great Britain, Chancellor of the Exchequer Rachel Reeves presented economic forecasts that focused on keeping finances stable. At the same time, Prime Minister Keir Starmer dealt with diplomatic challenges in the relationship with the USA and the situation in Iran.
The uncertainty in the markets is made worse by political tensions. Analysts point out that volatility is likely to remain high as long as there is no sign of calm on the energy front. Besides energy stocks, cyclical stocks also came under selling pressure because investors expect industrial demand to slow down. The situation in the cryptocurrency markets and in other asset classes also remained tense due to the general risk aversion.
