DAX still searching for direction as Middle East talks remain uncertain
The DAX is still searching for direction as weaker US labour market data support risk appetite but Middle East talks remain fragile. Investors are also weighing higher oil prices, Japanese trade data and an earnings season that has so far remained broadly encouraging.
Chief Market Analyst
Weaker US jobs data support risk appetite
Friday's weaker-than-expected US labour market report was well received by equity investors, as it reduced the likelihood of another Federal Reserve rate hike.
The resulting gains on Wall Street provided a positive lead for Asian markets, with most major indices starting the week in positive territory. The renewed modest rise in oil prices was largely offset by the improved interest-rate outlook.
Asian markets rise despite weaker Japanese data
Technology stocks were once again in focus across Japan, South Korea and China.
In Japan, however, the latest trade data disappointed, with the trade balance coming in significantly weaker than expected. The current account balance also fell short of market forecasts.
Middle East negotiations remain fragile
Negotiations between the United States and Iran briefly raised hopes over the weekend that a breakthrough could finally bring the conflict closer to a resolution.
However, Iran subsequently withdrew its approval of a potential agreement to reopen the Strait of Hormuz. Major sticking points and conflicting demands therefore remain unresolved.
While investors are still trying to look beyond the geopolitical uncertainty, upcoming inflation data could provide an uncomfortable reminder of the economic consequences of persistently elevated energy prices.
Earnings season offers a steadier backdrop
The trading week ahead could prove somewhat quieter. The earnings season has so far been largely encouraging, with the majority of companies reporting better-than-expected results and solid earnings momentum.
In the United States, more than 80% of S&P 500 companies have already reported. In Germany, GEA Group delivered results broadly in line with expectations this morning and reaffirmed its outlook.
Further earnings releases from Germany's mid- and small-cap segments will follow over the coming days.
DAX expected to remain range-bound
From a technical perspective, the DAX is expected to trade within a range of 26,000 to 26,400 points during today's session.
DAX lacks momentum ahead of the weekend as Middle East remains the key risk
The DAX lacks momentum ahead of the weekend as Middle East uncertainty keeps investors cautious. Strong Chinese exports and a modest improvement in German exports were offset by higher imports, while Allianz and Munich Re came under pressure after disappointing results.
DAX consolidates above 26,000 as German economic recovery gains momentum
The DAX is consolidating above the 26,000-point mark after its recent record-breaking advance. Stronger-than-expected German industrial orders added to evidence that the recovery is gaining momentum, while earnings from Siemens, Deutsche Telekom and Commerzbank remain in focus.
DAX pauses after record rally as Fresenius gains while Infineon comes under pressure
The DAX paused after its record rally above 26,400 points as investors took profits and geopolitical concerns returned. Fresenius remained in demand after strong earnings, while Infineon came under pressure amid growing concerns over the semiconductor cycle.