The German DAX began the trading day on Friday morning in negative territory, currently calculated at around 25,965 points by 9:30 am, registering a 0.3 percent decline from the previous day’s closing level. Andreas Lipkow, Lead Market Analyst at CMC Markets, stated that the primary objective for the index this Friday is to defend the 26,000-point mark that was reclaimed yesterday.
However, the trading week faces turbulence due to growing uncertainty in international stock markets. Investors are increasingly pulling back from semiconductor and AI stocks. Following the quarterly reports from Alphabet and Meta, companies like Amazon and Intel have reinforced doubts regarding the lofty expectations placed on the technology sector. Risk appetite is visibly shrinking, and the reduction of positions, which was already apparent in Asian trading, is expected to impact European exchanges as well.
Simultaneously, high inflation remains a persistent threat. At a press conference today, the Bank of Japan once again emphasized ongoing price pressures. Japanese inflation continues to run above the two-percent target, further compounded by high energy costs resulting from the war with Iran. A similar tug-of-war was highlighted yesterday by the European Central Bank. Central banks are ill-equipped to directly combat energy-driven price increases, but they must prevent this from leading to permanently higher inflation, thus leaving monetary policy as a drag on medium-term market outlooks.
Against this backdrop, the relative strength of the DAX is worth noting. While international technology stocks are under pressure, the German benchmark index benefits from hope for an economic turnaround in 2027. Investors are banking on the improved economic prospects of export-oriented German companies. Nevertheless, this optimism rests on increasingly fragile ground, as high energy and import prices continue to increase the cost burden for businesses.
Consequently, attention is focused on key German economic data today, particularly Gross Domestic Product alongside consumer and import prices. Import prices were reported to have surged by 2.1 percent compared to the previous month and a significant 10.4 percent year-over-year, significantly exceeding expectations. This indicates that external price pressures are accumulating and could jeopardize the hoped-for economic recovery. Looking at the broader picture, the GDP of the Eurozone will provide additional cues concerning the economic situation, and the Chicago Purchasing Managers’ Index will be released from the United States.
In related markets, the European community currency was slightly stronger on Friday morning, with the euro trading at $1.1199 USD, and the dollar at 0.8929 euros. The gold price weakened, dropping by 0.9 percent to $3,989 per troy ounce this morning, which equates to 114.51 euros per gram. Conversely, oil prices rose sharply; Brent North Sea crude traded at $117.30 a barrel around 9 am German time, a 2.1 percent increase from the previous day’s close.
