The DAX remained in positive territory throughout the day on Friday, following a strong morning start. By 12:30 PM, the leading index was calculated at approximately 25,460 points, marking an increase of 0.8 percent from yesterday’s closing level.
Andreas Lipkow, Chief Market Analyst at CMC Markets, noted that conditions coming out of Asia were manageable. Due to holidays in China and South Korea, major trading venues remained closed. Although Japanese exporters benefited from the weak Yen, rising Japanese government bond yields are increasingly acting as a brake on the stock market.
In Europe, however, potential new diplomatic signals regarding the Iran conflict might offer some relief. Discussions concerning a possible reopening of the Strait of Hormuz could put some pressure on the recently steep oil price increases. This remains a critical factor for investors. Any stabilization in the oil market immediately reduces inflation concerns, thereby easing the pressure on bond yields.
Despite this, investors are expected to remain cautious and highly selective leading into the weekend. Energy prices and bond yields continue to be the two most crucial drivers for the equity market. Concurrently, the GfK consumer climate survey posted a weak result of -30.6 points, significantly below the expected -27.2 points. This persistent consumer reluctance in Germany could weigh down stocks in consumer-related sectors.
Regarding the US-China meetings, many investors hoped for more breakthroughs, but major shifts were absent, though the existing trade peace was extended until January. In the current climate, this stability is not to be underestimated. The relationship between the world’s two largest economies thus remains one of the few geopolitical constants for the time being.
Lipkow described global equity markets as having transformed from expressways into roundabouts due to an ever-increasing number of construction sites. Energy prices, bond yields, inflation, the Middle East conflict, and economic worries are causing investors to jump from one topic to the next without a clear direction emerging. For a sustainable exit from this cyclical trading, new positive impulses are not necessarily required; first, some of the existing factors applying downward pressure must disappear.
Looking ahead this afternoon, attention is focused on the University of Michigan’s consumer climate data and US orders for durable goods. Following robust recent Purchasing Managers’ Index readings, analysts will closely monitor whether industrial data also confirms the resilience of the US economy. The perennial dilemma persists: overly strong data could once again drive up yields, quickly turning a positive economic report into a burden on the stock market.
In currency markets, the Euro strengthened slightly on Friday afternoon, trading at $1.1398 per Euro, while the Dollar was available for 0.8773 Euros. The price of gold saw gains, reaching $4,306 per troy ounce in the afternoon, representing a 0.6 percent increase, which translates to €121.47 per gram. Meanwhile, the oil price dropped significantly. By noon German time on Friday afternoon, a barrel of Brent crude from the North Sea cost $105.30, which is a decrease of 1.3 percent or 135 cents compared to the previous day’s close.
