The DAX index is struggling as investors remain concerned about the state of the German economy. The index, which is made up of the biggest companies in Germany, is trading at €12,773, which is a few points above last week’s low of €12,615. It has crashed by 22% from its highest point this year meaning that it is in a bear market.
Uniper bailout: Germany Lehman moment
German stocks have sold off this year as investors worry about the collapse of German companies as the crisis in Ukraine escalates. The biggest worry among corporate leaders in the country is that energy costs will continue rising. This is happening as Germany decouples from the cheap Russian energy products it has been accustomed to for decades.
The impact of the energy crisis is being seen in corporate Germany. The government is holding talks with Uniper, a leading utility company. Analysts expect that the company will receive at least $9.4 billion as it struggles to adjust its business to the new normal. Uniper has seen its stock price crash and is now valued at just $4.14 billion. The company is losing €30 million because of Russia’s curbed flows. In a recent statement, Germany’s economic minister warned that Germany could be facing its Lehman moment as energy companies collapse.
The DAX index is reacting to the relatively weak economic data from Germany. According to the statistics agency, the country’s exports tumbled in May while imports rose slightly. As a result, the country recorded its first monthly trade deficit in decades. This is a sign of what investors expect will happen in the coming months.