The DAX opened cautiously for trading on Thursday morning. Around 9:30 AM, the benchmark index was calculated at approximately 24,205 points, resting just slightly above the previous day’s closing level.
Jochen Stanzl, Lead Market Analyst at Consorsbank, noted that the momentum felt two weeks prior had since faded. According to Stanzl, “The air is out of the DAX.” The lack of strong market dynamics is attributed to the unresolved conflict in the Middle East, coupled with a generalized decrease in investors’ willingness to take risks due to rising yields. Currently, the DAX is testing its 200-day moving average, though Stanzl believes this indicator may no longer hold significant predictive power. He explained that 200-day lines are trend-following tools, and their usefulness diminishes when there is no clear trend. The DAX is currently experiencing a highly volatile, swinging market, a pattern that seasonality suggests could persist for several more weeks. Although a weak day can be offset by a strong subsequent day, this volatility does not necessarily point toward a clear directional trend.
Regarding central banking, Stanzl suggested that if the European Central Bank (ECB) adjusts interest rates today, it is unlikely to startle the market or cause major stock price reactions. Instead, the market will be focused on how ECB President Christine Lagarde assesses the monetary policy trajectory for the rest of the year. While it is possible she would not rule out another rate hike in September, the crucial question is whether this signals a path of serial interest rate increases until the end of the year-that would be the real surprise. Currently, the ECB is more likely to maintain a data-dependent approach to its monetary policy. Any major deviation from this course could introduce new volatility into the European capital market.
Looking at the technology sector, Stanzl commented on the SpaceX Initial Public Offering (IPO), stating that reports indicate demand for the stock is four times higher than the supply. However, he cautioned against assuming that this heightened demand at the initial offer price of $135 translates into sustained buying pressure after the listing and as the price rises. Demand could decrease if the stock falls on its debut, leading disappointed investors to sell. Stanzl concluded that the success or failure of the SpaceX IPO will provide valuable insight into the current state of investors’ appetite for Artificial Intelligence amidst the ongoing sector-wide price correction.
In other markets, the European currency saw a slight strengthening in the morning; one euro cost US$ 1.1552, while the dollar fetched € 0.8657. The price of gold managed to gain, with the spot price for a troy ounce reaching US$ 4,106 in the morning (+0.8 percent), equating to € 114.28 per gram. Oil prices, however, edged higher: a barrel of Brent North Sea crude cost US$ 93.26 around 9 AM German time, an increase of 16 cents, or 0.2 percent, compared to the previous day’s close.
