The German DAX index opened the trading day on Friday with a weaker performance. By 9:30 AM, the benchmark index was calculated at approximately 24,095 points, representing a 0.8 percent decrease from yesterday’s closing level.
Shares of Volkswagen were among the lowest performers on the list, following a pre-market announcement detailing a drop in profits exceeding one-third for the second quarter.
“The DAX has once again failed to overcome the resistance level at 24,500 points” noted Jochen Stanzl, Chief Market Analyst at CMC Markets. This keeps the psychological 24,000 level as a key trigger for a possible downward trend. “A close below this level could potentially mark the beginning of a more significant period of weakness.
While optimism surrounding a possible agreement with the United States regarding trade disputes persists, the finalized details remain uncertain. The cost of Japan’s concessions in Washington will need to be assessed.
Furthermore, investor sentiment on Wall Street had been exceptionally bullish leading up to the current trading session. “Certain sentiment indicators suggest that American investors have become exceedingly greedy and overly optimistic. This is reflected, in part, by the trading of a meme stock, which saw volumes of 15 percent of all traded shares in New York yesterday, despite a lack of supporting news or fundamental reason. It appears speculative trading is happening for its own sake, a pattern that has historically signaled a potential cooling of market prices.
Within the DAX, a period of observation and patience is advised. Between 24,000 and 24,500 points, the index remains relatively neutral. Neither yesterday’s rally nor today’s retracement appear to hold significant weight within the broader context. Investors are now focusing on identifying a breakout in either direction.
The Euro appreciated slightly this morning, trading at $1.1753, with the US dollar equivalent to €0.8508.
