DAX fails to hold gains as sustainability of oil price decline remains in question

In a session lacking fresh catalysts, the DAX briefly edged towards the 25,800-point mark today. However, momentum soon faded, with profit-taking pushing Germany’s benchmark index back towards the previous day’s closing level.

Initial support once again came from the oil market. Hopes of an imminent end to the war in Iran had already driven energy prices lower at the start of the week, and that trend continued today. Brent crude briefly fell back below the psychologically important $100 a barrel mark.

However, the move below this threshold now needs to develop into a sustained downward trend before it can provide a stronger catalyst for the DAX. A brief dip below $100 a barrel alone will not be enough to ease investors’ inflation concerns.

The key factor remains developments in the Middle East. A lasting diplomatic solution could not only reduce geopolitical risks but also ease inflationary pressures through lower energy prices. This would diminish one of the biggest headwinds for both equities and bonds in recent weeks.

Wall Street also received support from today’s ADP employment data, which came in better than expected. The figures provide further evidence of a resilient US economy and strengthen confidence in the economic outlook. At the same time, they are helping to ease concerns, at least for now, that further interest-rate hikes could place too much pressure on economic growth.