The German stock index, the Dax, began trading positively on Friday. Around 9:30 AM, the index was calculated at approximately 26,260 points, registering a 0.5 percent increase from the previous day’s closing level.
According to Jochen Stanzl, chief market analyst at Consorsbank, the Dax has surpassed its previous record high set in July this week. However, he cautions that a technically valid price breakout will only be confirmed if the gains can be maintained over the weekend. He warns that a drop below 25,900 points could lead to a “bull trap” and a renewed decline in prices. Stanzl noted that for a year, many investors felt the Dax was overly valued at around 26,000 points, and the current market activity will reveal how strongly investors believe in the new upward trend.
The market’s afternoon movements are poised to be heavily scrutinized due to the expected US labor market report, which could fundamentally alter market expectations. This data will influence whether market participants still view a September interest rate hike by the American central bank as probable, suggesting that the Frankfurt Stock Exchange may experience short-term volatility later in the day.
Regarding global commodities and currency, the price of oil has decreased noticeably; a North Sea Brent barrel traded at $83.32 around 9 AM German time, representing a gain of 1.0 percent or 83 cents from the previous close. Overall oil prices are now below $100, which is expected to slightly alleviate inflationary risks. However, Stanzl emphasized that a sustained downtrend in energy prices is doubtful, as the ongoing talks between conflict parties in the Persian Gulf remain too fragile and often conclude without concrete results.
He further stated that the American central bank must continue to balance its two main mandates and cannot ignore the labor market. A stronger labor market report would solidify the belief that interest rates have not yet reached their peak.
In other markets, the European common currency was slightly stronger on Friday morning; one Euro cost $1.1522, meaning a dollar was trading for 0.8679 Euros. Meanwhile, the price of gold saw a significant gain, with a troy ounce trading at $4,290 (+1.2 percent) in the morning, corresponding to 119.71 Euros per gram.
