DAX Wipes Out Near-2% Yearly Gain as OpenAI Delay and Rate Fears Trigger Sharp Reversal

German DAX drops 1.26% from near 25,000 as OpenAI IPO delay and ECB rate-hike stance erase weekly gains, testing key support at 50-day moving average.

The German benchmark's fleeting run at the 25,000 level evaporated in dramatic fashion on Friday, with the DAX slumping 1.26% to close at 24,680 points. The sell-off, driven by a one-two punch of a delayed mega-IPO and renewed central bank tightening signals, slashed the index's year-to-date advance to a meagre 0.58% — a stark contrast to the near-2% gain it had built just a day earlier.

A blistering rally on Thursday had carried the DAX to within a whisker of the psychologically critical 25,000 milestone, finishing Xetra trading at 24,994. That session had been fuelled by a wave of blockbuster corporate deals and upbeat economic readings. Merck struck a roughly €10 billion deal to acquire US life-sciences group Bio-Techne, sending its shares 5% higher, while Volkswagen sold a majority stake in its Everllence unit to Bain Capital in a transaction valued at over €8 billion — a move analysts applauded for simplifying VW's structure as the stock gained 1.7%. Meanwhile, Micron Technology's blockbuster sales forecast lifted German semiconductor names: Infineon surged over 3% and Suss Microtec climbed 5%. The Ifo business climate index unexpectedly rose to 85.6 points in June, and a US growth revision eased fears of a hard landing, stoking risk appetite among institutional investors.

But the mood soured sharply on Friday as news emerged that OpenAI had postponed its blockbuster IPO, hammering technology stocks and sapping risk tolerance across the board. Adding to the pressure, European Central Bank director Isabel Schnabel reiterated the institution's restrictive stance in a fresh interview, dashing any lingering hopes of a near-term pivot. With eurozone inflation still running at 3.2% — well above target — and the ECB having just hiked its benchmark rate to 2.25% in mid-June, traders recalibrated expectations for further tightening.

The flight to safety was immediate. Institutional investors rotated aggressively out of cyclical names and into defensive sectors. Bayer led the DAX with a 1.72% gain, followed by Henkel and E.ON, shielding the index from an even deeper slide. On the other side, Mercedes-Benz fell sharply after announcing an intensified cost-cutting drive, and Zalando came under pressure from a BaFin audit. The volatility index VDAX-NEW rose to 17.35%, reflecting heightened nervousness.

Technically, the DAX is now testing critical support. The index sits barely above its 50-day moving average at roughly 24,603 points. A breach there would put the long-term trend line — the 200-day moving average near 24,278 — in play. Thursday's robust positioning above the 50-day line had fuelled optimism about a push toward the record high of 25,507, but that narrative has been abruptly disrupted.

Traders now look to the US open for direction. With Wall Street closed on Monday for a public holiday, many expect profit-taking to accelerate into the weekend. The DAX's brief flirtation with 25,000 has given way to a stark reality check — one that has erased most of the year's gains in a single session.