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Germany's DAX Index Retreats Amid Reignited US-Iran Conflict Fears

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German shares ended the trading week in the red, as the markets monitored geopolitical tensions in the Middle East and trade negotiations between the US and China.

At Friday's closing, the blue-chip DAX index lost 2.07%.

In a Thursday interview with Fox News, Trump said he is "not going to be ​much more patient" with Iran, urging the country to make a deal with Washington. Ongoing tensions in the Middle East and shipping disruptions in the Strait of Hormuz continued to support oil prices, adding to inflation and growth concerns. According to Deutsche Bank Research, Brent crude oil prices climbed another 1.21% overnight to $107.00 per barrel.

Rystad Energy also warned about tightening jet fuel supplies in Europe as the Strait of Hormuz remains closed.

"Europe is not facing a tight market. It is facing a structural supply hole," Susan Bell, Rystad Energy's senior vice president of commodities - oil said. "Record US Gulf Coast exports of 110,000 [barrels per day] into Europe and a handful of Dangote cargoes are welcome, but they cover less than half the deficit."

Back at home, the ifo Institute reported that business sentiment in Germany's residential construction sector deteriorated, as the industry navigates supply chain issues and rising capital costs fueled by geopolitical uncertainty. The business climate index plunged to -28.4 points in April 2026 from -19.3 points a month ago, marking its sharpest drop since April 2022.

On the corporate front, Renk Group (R3NK.F) was down 2.68%, as Berenberg adjusted its price target and forecasts for the military and civilian propulsion systems company to incorporate anticipated drops in German vehicle orders.

"RENK's medium-term outlook is underpinned by a EUR16.5bn order pipeline. Germany accounts for less than one-fifth of the total, on our estimates, offering an attractive level of diversification. We err on the side of caution and lower our German vehicle order intake assumptions, and this results in minor cuts to our EPS estimates," Berenberg wrote. "We lower our price target to EUR72 (from EUR76) to reflect our lower estimates and lower peer multiples."

Meanwhile, RWE (RWE.F) and Abu Dhabi Future Energy Co., d/b/a Masdar, secured approval from the UK Department for Energy Security and Net Zero to develop the Dogger Bank South West and Dogger Bank South East offshore wind farms off the northeast coast of England. The projects have a combined installed capacity of 3 gigawatts. The German energy group ended the session 2.30% lower.

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