Germany's DAX index hits one-year low

Germany's DAX index hits one-year low

2014-10-10 11:08

Paris - Germany's DAX index sank to a near one-year low on Friday, knocked down by rising worries about the strength of Europe's biggest economy following a raft of bleak macro data.

The DAX, which had soared to a record high of 10 050.98 points in June, fell 2.2% to 8 805.84 points by the middle of the trading session, marking the German benchmark index's lowest level since October 2013.

The German market's sell-off comes on the back of this week's grim data showing German exports in August fell the most since January 2009 and industrial orders and output steeply dropped.

The DAX - which has been the eurozone's best-performing stock index in the five years since Lehman Brothers collapsed - is lagging all other major markets so far this year, losing 6.7%, while the pan-European FTSEurofirst 300 is down 1%.

READ: German exports plunge amid global crises

The DAX has been hit hard this week by a raft of poor data from Germany, Europe's biggest economy, including statistics on Thursday which showed that German exports in August had fallen by their largest amount since January 2009.

Traders said the International Monetary Fund's decision this week to cut its global growth forecasts, and worries about the Ebola virus - which has hit travel stocks - were also weighing on equity markets.

"I don't think there'll be a full-on meltdown, but I think we will be in a bearish market for the next few weeks," said Darren Courtney-Cook, head of trading at Central Markets Investment Management.

European 'QE' on the way?

The DAX's decline on Friday pushed it below the 8 900 point level which had marked previous low points reached this year, and Courtney-Cook said the index had scope to fall to the 7 500 point level over the next month.

Many fund managers have argued that the poor German economic data could put more pressure on the European Central Bank to undertake new economic stimulus measures, such as quantitative easing, which could lift stock markets.

"I've been taking profits but I would not necessarily run and hide from European equities," said Caroline Vincent, European equities fund manager at Cavendish Asset Management.

"The poorer the data gets, the more likely it is that the ECB will do QE."