DAX Retreats as Iran Closes Strait of Hormuz, Sending Oil Prices Surging

The German DAX index declined 0.82% to 23,809.43 on Thursday, as investors reacted to a sharp escalation in geopolitical risks and weak domestic economic indicators. The sell-off erased gains from the previous session, reflecting a broader shift toward risk aversion across European markets. Markets are on edge following the closure of the Strait of Hormuz by the Islamic Republic, with reports suggesting the Revolutionary Guard Navy has deployed sea mines in the critical waterway. This move coincides with Israel expanding strikes in Lebanon, creating a volatile environment for global energy supplies. Iranian Foreign Minister Araghchi stated that the U.S. must choose between a ceasefire or continued war, while President Donald Trump affirmed that U.S. military forces will remain deployed until Tehran complies with a 'real agreement.' The geopolitical shock triggered a sharp rise in energy costs, with Brent crude futures surging approximately 4% to $98.53 per barrel. This volatility weighed heavily on the DAX, where SAP fell 3.7% and Rheinmetall dropped 3.5%. Major automotive manufacturers, including Volkswagen and Mercedes-Benz, saw declines ranging from 2.1% to 2.6%. Adding to the downward pressure, data from Destatis revealed that Germany's industrial production unexpectedly fell 0.3% in February, missing the projected 0.6% growth. However, the report provided a silver lining in trade; German exports grew 3.6% month-on-month, marking the strongest increase since May 2022, despite declining sales to the U.S. and China. While most of the index struggled, some sectors found support. BASF climbed 1.5%, and companies such as Brenntag, RWE, and E.ON posted modest gains as the market adjusted to the shifting energy landscape.