Will a general strike next week cause the DAX crash?

Last Updated: 4. Januar 2024By

Will a general strike next week bring about a DAX crash? Starting on January 8th (next Monday!), farmers are planning a week of protests against the policies of the traffic-light coalition. Trucking companies are also joining in the protests. Along with the simultaneous railway strike, a mega-chaos threatens the German economy.

Will a traffic chaos soon paralyze the German economy? The extent of the disruptions will depend on the duration and scale of the protests. After just a few days of strikes, food and fuel could become scarce. In this scenario, it is possible that large parts of the economy could come to a standstill due to a lack of employees, materials, and/or fuel.

Will a general strike next week cause a DAX crash? In a situation where the German economy is already in a downward trend after more than a year of decline, this is certainly not good news. However, the impact on the stock market is expected to be manageable.

Only a portion of the German economy is actually listed on the stock market. Many medium-sized companies or trade businesses, which form the backbone of the German economy, are not.

Furthermore, the disruptions caused by the strikes are likely to be limited in duration. Only in the case of a longer (several weeks) strike will the German stock market likely react significantly. However, in this scenario, the reaction could be even more severe, as currently very few people on the stock market are anticipating strong and lasting disruptions.

In recent history, only the government has been able to bring the German economy to a standstill for an extended period of time. You may still remember the lockdowns from spring 2020, which laid the foundation for the current debt, strong inflation, and loss of prosperity.

Correction is possible, but a crash is unlikely. I do not expect comparable effects on the economy from strikes in the coming weeks. As an investor, you do not need to panic.

However, a correction on the stock market is still likely, but for different reasons. It seems to have already begun. Since the beginning of the year, stock prices have been showing signs of weakness.

A completely different matter are the possible effects of strikes on you as a consumer or employee. How will you get to work if the bus no longer runs due to a lack of fuel? What will you eat if supermarket shelves are empty due to striking trucking companies?

You should have an answer to these questions, even though I consider such scenarios to be unlikely „worst-case“ scenarios. As the saying goes: It’s better to have and not need, than to need and not have. Some precaution (such as a full tank of gas and a few canned goods in the pantry) can never hurt. This applies to the stock market as well as in real life.