DAX starts on a sceptical note as cracks appear in Wall Street rally

The record-breaking mood on Wall Street is beginning to show cracks. While the S&P 500 and Nasdaq 100 continue to reach new highs, the rally is increasingly being driven by only a handful of large technology companies. The broader market is struggling to keep pace. A few heavyweight stocks can push an index to record levels, but a healthy rally looks different.

This scepticism was already evident in Asian trading. High energy prices and persistently elevated bond yields triggered profit-taking. At the same time, questions are growing over whether major technology companies such as Samsung and SK Hynix will actually be able to meet investors’ high expectations.

For the DAX, oil prices also remain a key headwind. Brent crude is back at around $106 a barrel, with no sign of any sustained relief. High energy prices, rising yields and ambitious equity valuations are increasingly coming into conflict. Whether this develops into a broader sell-off across equity markets will largely depend on the upcoming earnings season. It will show whether share prices currently reflect too much euphoria, or perhaps already too much scepticism.

Some support is coming from better-than-expected German industrial production data, which are keeping hopes of an emerging economic recovery alive. However, it is still too early to declare a turnaround. Later in the day, attention will turn to the Federal Reserve’s meeting minutes for possible clues on the future path of interest rates. From a technical perspective, the DAX is expected to trade within a range of 25,150 to 25,450 points today.