DAX set for a slightly weaker start as bargain hunters return to AI stocks

The DAX is expected to open the new trading week at around 25,770 points. Positive cues from Wall Street and Asian markets are raising hopes of a stabilisation in Germany's benchmark index. Investors have been particularly keen to snap up technology and semiconductor stocks that have recently come under heavy selling pressure. The initial shock following the US midterm elections appears to have subsided, with many investors now viewing the significantly lower share prices as attractive entry opportunities. Following the sharp correction, an initial rebound could therefore be on the cards.

Falling energy prices offer support

Further support is coming from the continued decline in energy prices, reflecting hopes that the conflict in the Middle East could ease, at least temporarily. The US and Iran appear to be engaged in negotiations on several levels, while Washington has suspended its attacks for the time being. However, the situation remains fragile. Isolated attacks on vessels in the Strait of Hormuz demonstrate just how quickly tensions could escalate again. Although the geopolitical risk premium in financial markets has declined significantly, it has by no means disappeared entirely.

Bargain hunting returns to battered stocks

Today's trading session is unlikely to deliver many fresh catalysts. Following several turbulent weeks, market participants are expected to approach the new environment cautiously. Individual stocks that have suffered particularly sharp declines could attract buying interest as investors look for attractive entry opportunities. Whether bargain hunting alone will be enough to drive a sustained recovery across the broader equity market, however, remains to be seen.

German trade figures in focus

On the economic front, Germany's September export figures and trade balance could attract attention. The key question will be whether foreign trade can reinforce the recently growing hopes of an economic recovery in Germany. In the US, wholesale inventories are scheduled for release in the afternoon.

DAX outlook: rebuilding confidence

The DAX is expected to trade within a range of 25,600 to 25,950 points at the start of the week. Given the positive international backdrop, the prospects for stabilisation appear reasonably favourable. However, a sustained return above the 26,000-point mark will require more than hopes of attractive buying opportunities. Investors need to regain confidence in the economic outlook. The first step towards that goal could be taken today, but a continuation of the year-end rally is likely to require a little more patience.