DAX struggles with 26,000 as ECB meeting looms

The rally in semiconductor and AI stocks continued across Asian markets today, supported by encouraging fundamental data from both China and Japan. China’s trade surplus widened sharply once again, driven in particular by exports of semiconductor technology. Positive trade data also emerged from Japan, although the figures are simultaneously fuelling expectations of an interest rate hike next week.

Another key battleground remains the Bank of Japan’s attempt to defend the yen. The central bank has been intervening heavily for several days in an effort to counter the currency’s weakness. This could, in turn, contribute to a further rise in US Treasury yields, as many investors have taken out cheap yen-denominated loans and invested the proceeds in government bonds.

Meanwhile, Brent crude is once again approaching the $100 a barrel mark, adding to price pressures and weighing on consumer sentiment. This is also bringing Thursday’s European Central Bank meeting into sharper focus. Christine Lagarde will have to address the question of whether a single rate hike will be enough to bring inflation under control, or whether further monetary tightening could ultimately jeopardise the economic recovery in the eurozone.

Germany also released economic data this morning, with a mixed set of figures that were partly better than expected. The trade surplus widened to €21.3 billion, significantly above expectations of €15.3 billion. Exports, however, fell by 0.8%, compared with expectations for an increase of 0.3%.

Following the US public holiday, today’s session is likely to be dominated by the reopening of Wall Street and the upcoming quarterly results from Oracle and Adobe. From a technical perspective, the DAX is expected to trade within a range of 25,800 to 26,050 points today.