It’s late in Europe, and the equity markets are already closed. In Germany, the largest European stock market, the Dax index closed the year down by -12.4%.

But it could have been worse.

In late September or early October, the German stock market bounced together with the positive developments seen in the global equity markets. When the Fed pivoted due to a slowdown in the rise of the prices of goods and services in the world’s largest economy, US stocks bounced, and the positive vibe spread to other regions in the world.

(Click on image to enlarge)

Dax chart by TradingView

Should not have been for the bounce, the Dax would have delivered an even worse result to investors believing in the German stock market. One thing is sure – Europe was not the easiest place to invest in in 2022.

Dax has dropped the most this year since 2018

Despite the bounce in the last months, the Dax still dropped by the most since 2018. It closed the year at 13923.59 points, and 31 out of the 41 Dax components delivered a negative return.

Out of the ones that delivered a positive performance, Beiersdorf and RWE stand out of the crowd, with +19%, respectively +16% on the year.

When the war started in Ukraine in February, as a result of Russia invading its neighbor, everything changed in the European space. Together with its allies, European nations have imposed sanctions against the invader. But the sanctions also worked against the European economies.

At a time when inflation rose well above the European Central Bank’s target, the war in Ukraine only added to the energy crisis already in place in Europe. The ECB did hike the rates, too, following the Fed’s path, and it ended the year even more hawkish than the North American central bank.

All in all, Dax’s negative performance on the year is not something to celebrate. However, it outperformed US equities in a difficult context for Europe, thus bringing some relief to the German stock market investors.

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