The DAX began Friday’s trading day in the red. Around 9:30 a.m., the leading index was calculated at approximately 25,610 points, which was 0.4 percent below the closing level of the previous day.
Market analyst Andreas Lipkow from CMC Markets noted that Asian stock markets largely incorporated the positive outlooks provided by Wall Street at the end of the week. Technology stocks were particularly strong performers, while decreasing oil prices and falling yields provided additional tailwinds to the equity markets. Major indices in China, Japan, and South Korea all posted significant gains.
Activity was sparked by the Bank of Japan. Although the central bank increased its key interest rate by 25 basis points to 1.25 percent, the decision was not unanimous, passing with seven to two votes. Consequently, the market reacted more quietly to the central bank’s appearance than anticipated, putting downward pressure on the yen. The voting pattern suggests that the Bank of Japan should proceed cautiously regarding further monetary tightening.
With the key central bank decisions of the week concluded, the “Hexen Sabbath”-a typical derivatives trading day-is now in focus. At midday, index options and futures will settle, followed by equity options at the closing auction. During these times, individual index and stock prices may experience larger fluctuations. Therefore, not every unusual movement today should automatically be interpreted as a new market signal; on this major expiry day, positioning in derivatives markets temporarily dictates prices more strongly than fundamental news.
The DAX also faces a pressure factor this morning due to stronger-than-expected increases in German producer prices. Following this surprising rise in wholesale prices, indicators of increasing price pressure in Germany are becoming more pronounced. While declining energy prices are currently easing inflation concerns in the markets, the latest German price data suggests the opposite. For investors, the inflation debate remains far from over.
Lipkow concluded that the trading session is likely to start somewhat reservedly, as many of the positive impulses were already processed in yesterday’s afternoon trading. Although this “Hexen Sabbath” may generate additional movement following a busy central bank week, it is unlikely to impose a new direction on the market.
Currency movements saw the Euro slightly strengthen in the morning, trading at 1.1479 US dollars, meaning the dollar was available at 0.8712 euros.
Gold prices benefited significantly, reaching $4,392 per fine ounce in the morning, a gain of 1.3 percent, or €123.02 per gram. Conversely, oil prices dropped sharply. The price of a North Sea Brent barrel was around $102.70 at 9 a.m. German time on Friday, representing a decrease of 2.1 percent or 215 cents from the previous day’s close.
