The DAX began the trading day on Friday morning with positive movement. As of around 9:30 AM, the leading index was calculated at approximately 25,440 points, marking a 0.7 percent increase over the previous day’s closing level. Jochen Stanzl, Chief Market Analyst at Consorsbank, noted that the stabilization of bonds this morning was attributed to rebounding oil prices, though he cautioned that this was only a snapshot which could quickly change. For the DAX, he maintained that stabilization would occur within a trading range well short of the record high, which is still five percent away.
While the euro’s depreciation against the US dollar by just over two and a half cents in the last two and a half weeks benefits German exports, and forecasts for the German economy are improving, the DAX still lags behind major Wall Street indices.
Stanzl pointed out that the foundation of the recent stock rally is becoming increasingly unstable on Wall Street. Although the AI trade has created a new standout company like AMD, which has just surpassed the one-billion-dollar market capitalization threshold, the recent rally should not mask the dwindling market breadth. Only 30 percent of stocks in the S&P 500 are currently trading above their 50-day moving average-half the amount seen three weeks ago. When the S&P 500 reached a new record high on Monday, only seven stocks shared that distinction, whereas four times that number had previously marked new annual lows.
Regarding presidential election cycles, Stanzl stated that this period is well-studied in financial markets. On average, a stock market correction can be expected before mid-term elections due to rising political uncertainty as the election date approaches. However, once the results are known, this uncertainty usually dissipates for investors, meaning that the twelve months following mid-term elections have historically been among the best of the entire four-year cycle.
On currency markets, the European common currency strengthened slightly on Friday morning; the euro cost 1.1380 US dollars, meaning the dollar was available for 0.8787 euros.
Commodity prices saw some shifts. The gold price dipped slightly, with a spot price for a fine ounce trading at 4,274 US dollars in the morning (-0.2 percent), which corresponds to 120.75 euros per gram. Meanwhile, the oil price fell. At approximately 9 AM German time, a barrel of Brent crude from the North Sea was priced at 105.90 US dollars, representing a drop of 0.6 percent or 66 cents from the previous day’s close.
