The DAX index is down 0.69% on the day as European markets falter this Tuesday on the back of a slew of negative fundamentals. Concerns over weaker earnings, the gas crisis and a hawkish ECB are weighing on the index, which is still smarting from last week’s underwhelming PMI data.
The DAX index has met strong headwinds after Russia slashed gas supplies to the region. Gazprom said it was cutting supplies to Europe via its Nord Stream 1 pipeline by about 20%. Much of Europe’s gas supply comes from Russia, and investors fear the coming months could usher in an uncertain winter if the energy supplies dry up entirely.
This has put pressure on Germany’s manufacturing base, which is already facing headwinds as shown by last week’s PMI data that showed a contraction of business activity in Germany’s manufacturing sector.
Last week’s hike in interest rates by the ECB may also be weighing on sentiment. The DAX typically underperforms when higher interest rates are at play, as borrowing for capital investments becomes more expensive.
