Stock Market Breakout: Oil Price Slump and Middle East De-escalation Fuel the DAX Rally!
A sigh of relief on the trading floor: Initial de-escalating signals from the Middle East provided palpable relief at the start of the week. The oil price immediately acknowledged this geopolitical relaxation with a massive price plunge of over 6 percent—providing the DAX with the perfect fuel. The German leading index shot up by a solid 1.6 percent, temporarily breaking the 25,500-point mark and leaving both the EuroStoxx (+1%) and the US tech exchange NASDAQ (+0.8%) in the dust. Now the pressing chart-technical question arises: Can the DAX finally achieve a sustainable upward breakout from its stubborn sideways phase that has lasted for around a year? The medium-term price target of roughly 28,000 points by 2028 remains completely intact as long as the overarching upward trend is not broken.
Week of Truth for Big Tech: Is the Next Sell-Off Looming After the Alphabet Shock?
While the DAX is demonstrating remarkable relative strength, investors are gazing intently at Wall Street. The absolute "week of truth" is on the agenda for the Big Tech giants: Apple, Microsoft, Meta, and Amazon are opening their books. The great danger currently lies in the sometimes astronomical market expectations. Paradoxically, even excellent quarterly figures could trigger disappointment if the outlook weakens even slightly. Alphabet already provided a cautionary tale last week: After the company had to report a negative free cash flow for the first time, the stock promptly plummeted by over 7 percent. The stakes for the remaining tech heavyweights are enormous.
The US Federal Reserve's Interest Rate Poker: Will the Fed Surprise the Markets With a Hawkish Turn?
As if the tech balance sheets didn't offer enough explosive material, the Fed interest rate decision is moving into the absolute focus of the markets mid-week. After four consecutive rate pauses, concerns are growing that the US central bankers could actually turn the interest rate screw again. Although the latest US inflation data for June turned out better than expected, the restrictive "Dot Plot" and omnipresent inflation fears—latently fueled by war-related oil price fluctuations—are keeping the pressure high. The market is currently pricing in another rate pause with a probability of only 62 percent. Investors are not expecting the true directional decision and the urgently needed forward guidance until the upcoming FOMC meeting in September. Until then, monetary policy remains a nerve-wracking balancing act.
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk. Forecasts are not guarantees. Rates may change. Political risk is unpredictable. Central bank actions may vary. Platforms’ tools do not guarantee success.