GER40

This week’s US inflation data may impact Wall Street but will likely have limited implications for European indices. But one factor that is certainly weight on sentiment on this side of the pond is political uncertainty in Germany. Against this backdrop, our DAX forecast is turning bearish in the short term, especially if the German index now breaks a key support area that it was testing at the time of writing.

With the US election now just one day away, things can turn rapidly across financial markets, particularly because this is turning out to be such a close election and the polls cannot and should not be trusted. Given the fact that the DAX has weakened in the last couple of weeks, this also argues against a sustainable recovery as the prior bullish momentum has been lost.

You would have thought that on the back of a stronger showing from the Eurozone GDP that the DAX and other European indices would have been rallying today. Well, that hasn’t been quite the case as traders digested a deluge of mixed earnings while the handover from China was again not great with the markets there falling. Meanwhile, a technical breakdown means the DAX forecast has turned somewhat bearish in the near-term outlook.

The DAX was trading slightly lower, down for the third consecutive day, although it was only around 1.5% off from the recently achieved record high. Far from a turmoil, in other words. But equally, the loss of bullish momentum may be a sign that the markets could go in reverse soon.

Today’s German wholesale inflation data pointed to further ECB rate cuts in December, keeping the bullish DAX forecast intact – for now, anyway. However, ongoing weakness in the Eurozone economy, coupled with political uncertainty in the US – with the presidential election now only two weeks away – and not to mention the fact China’s markets don’t seem to be finding a sustainable recovery despite ongoing government stimulus efforts, all point to a potential dop in the coming weeks.

Today’s drop in the German luxury auto sector underscores those concerns, ahead of global PMI data. Concerns over the escalation of the middle east situation further hurt sentiment in Europe. Still, the DAX forecast is not completely bearish yet given that we have only just hit another record high this week. Bearish speculators will be in need of some downside follow-through to grow in confidence that at least a short-term top is in.

The absence of new bearish news and a light economic calendar have helped improve risk appetite somewhat. While not completely out of the woods, the market's realignment with fundamentals offers a more optimistic outlook. Stay tuned for further updates as the DAX tries to establish a base around its 200-day average.

The German DAX index is showing a bullish signal, setting the stage for potential gains on Friday and possibly in early next week ahead once the French elections are out of the way.

What has driven the German index to record highs and can the rally persist? US investors are back, with Nvidia earnings coming into focus this week. DAX technical analysis shows index is testing key support.

The German index hit another record high on Friday, but the risk of a potential correction in tech sector is increasing. For now, the DAX continues to point higher, which means the bears must continue to wait for the right signal.

Risk appetite diminishes after some disappointing earnings, while China’s deflation threat held back equities ahead of Lunar holidays despite stimulus measures. DAX technical analysis point to fading bullish momentum at all-time highs, just as the S&P 500 nears the 5000 mark following a sharp tech-fueled rally.

DAX outlook: Dovish ECB could support European stocks, as promising signs emerge for global indices after slow start for risk assets in 2024. DAX technical outlook points to a new record high.

Risk appetite improved a little in early European trade, as the major EU indices and US futures bounced back a little. However, by mid-day, those gains had evaporated, although the downside was limited as traders were unwilling to commit in either direction ahead of key US employment data.

Welcome to the first edition of Technical Tuesday for 2024. In this report, we will get technical on the DAX, FTSE and China A50.

Like the vast majority of indices, the Dax has generally performed well in December. But a closer look at December's performance shows a strong tendency to rally either side of Christmas.

After hitting a new all-time high in February, the FTSE has struggled to find any sustainable support, hurt by concerns over China, UK’s struggling economy and high interest rates across the world. But we have had some positive data out of China, the UK and US this week, which may mean the worst days are behind us.

As investors assess the risks of interest rates remaining high for longer, and of course, the escalation of the situation in the Middle East following the bombing of the hospital in Gaza, they are not going to be aggressive in risk-taking you would think.