The DAX started its trading day on a positive note on Friday morning. By 9:30 AM, the benchmark index was calculated at approximately 25,015 points, marking a 0.3 percent gain over the previous day’s closing level.
Jochen Stanzl, Chief Market Analyst at Consorsbank, commented that a combination of inflation concerns, rising yields, and higher oil prices had forced the DAX out of its trading range. He noted the significance of the current low, which coincided with the period where the DAX has, historically over the last two decades, reached its lowest point in the second half of the year-a pattern that typically precedes a year-end rally. Although the prospect of this pattern repeating remains uncertain, Stanzl stressed that the timely correlation is noteworthy.
Regarding the broader economy, the soft PCE inflation report from Wednesday has reduced the likelihood of an interest rate hike by the US Federal Reserve before the midterm elections. Currently, a rate change is not anticipated until the meeting in December. Consequently, US labor market data is the key focus today, as it will aid in determining how urgently the Fed needs to reverse its monetary policy, which it still considers beneficial for growth.
The volatility in oil markets remains highly sensitive to geopolitical developments, specifically the conflict involving Iran. The deployment of a third US aircraft carrier and an additional 10,000 soldiers to the region has failed to ease tensions. Concerns are rising that Iran might retaliate against the US military buildup by launching new attacks against the oil and gas infrastructure of its neighboring countries. Furthermore, the security situation in the Bab al-Mandab strait remains unresolved. Stanzl concluded that the situation is a powder keg capable of impacting the stock market at any moment.
In other financial updates, the Euro was stronger in the morning session, exchanging at €1 for $1.1266, and the dollar fetched 0.8876 Euro. The gold price saw a slight increase, reaching $4,185 per fine ounce at the open (up 0.2 percent), which is equivalent to €119.42 per gram. Meanwhile, the price of Brent crude oil dropped significantly. Early Friday morning, a barrel of the North Sea-grade Brent cost $101.10, a decrease of 117 cents, or 1.1 percent, compared to the previous day’s close.
