The Dax had lost 450 points from Thursday evening until yesterday morning. The sole reason for this was the killing of the Iranian General Soulemani by the USA. Iran’s threats are massive, and the US has made it clear that it will respond in a hard-line military manner if US targets in the region are attacked by Iran. Yesterday and today there have been and continue to be new massive threats from Iran, but a really massive attack is not (yet) in sight.
Good mood in the Dax
So the simple logic of the markets is: all is well, all is not so bad. Besides, Germany’s trade volume with Iran has already shrunk considerably anyway thanks to US sanctions. So where is the problem for the Dax companies in relation to the Iran crisis? Everything back into stocks, and so the Dax has already gained 316 points again from yesterday morning until now. Simply incredible. It’s that simple? It is now. But let’s see how quickly this recovery will turn back into a sudden crash if Iran really implements its threats. And the threats are so public and so massive that the state leadership in Tehran can no longer avoid attacking US institutions. Because if this were not done, the fundamental fear of a “threatening” Iran in the region would be gone (lose face), and the Iranian leadership would also be badly weakened in domestic politics.
VDax appears relaxed
So, is this current Dax rise parallel to the recovery in oil prices a deceptive calm? Quite possibly. The VDax, which represents the expected fluctuation on the futures market for the Dax, was still trading at an index level of 13.70 points on Thursday evening shortly before the Iranian general was killed. Then on Friday it rose to 15.75, and yesterday it reached its latest high of 17.73 points. And now? The chart shows the VDax since last Thursday noon until now. It has dropped to 14.87 points, and has thus relinquished most of the escalation fears for the Middle East.
As already mentioned, the VDax is falling sharply, which indicates that the futures market does not expect another sudden slide. A risky bet, considering that Iran now has its back to the wall, so to speak, and must do something against the USA. The following chart shows the course of the Dax since December 27th. The crash since Friday morning has almost been made up for so far. As if nothing had happened? As if no further escalation is pending in the Gulf. But please, please. We don’t know what’s going to happen, when or how.