DAX starts the week with a tailwind: calm before the autumn storm?

Falling energy prices and an easing of trade tensions between the European Union and China are initially providing a tailwind for the DAX. The prospect of Russian diesel supplies to the US is taking some pressure off international energy markets. Politically, however, the development remains highly sensitive, as it could also shift the balance of power in the war in Ukraine. Meanwhile, tensions in the Middle East remain elevated.

Additional support is coming from an agreement between Europe and China on export restrictions for hybrid vehicles. This appears to have averted a further escalation of the trade dispute for now. European automotive stocks in particular could benefit, giving the DAX another opportunity to advance towards the 25,400-point mark.

For equity markets, relief from falling energy prices is currently worth more than many a positive economic indicator. Lower energy prices ease inflationary pressures, reduce the burden on central banks and could consequently also help bring down bond yields. However, the decline in energy prices does not mean that the numerous other headwinds have disappeared.

With few major economic releases scheduled and trading activity in US markets expected to be limited, today's session is likely to remain relatively quiet initially. But the calm could prove deceptive. With the official start of the US earnings season, investors could be facing a turbulent week. The major banks in particular will need to demonstrate that their business performance can justify the market's elevated expectations.

From a technical perspective, the DAX is expected to trade within a range of 25,050 to 25,400 points today.