Some investors are likely asking themselves whether the support level will hold or if the correction has already ended. On Wednesday, the sell-off initially came to a halt, which provided some relief to market participants. By the end of the trading day, the index was up 0.46%, closing at 23,594.80. The support level has held for now, but how long will this last?
The latest economic data paints a somewhat gloomy picture. Due to increased US tariffs on exports, companies are already experiencing a decline in orders. This will not only impact companies' revenues and profitability but could also lead to job losses. In Germany, unemployment has risen to 3 million people. This clearly shows that the development of the German stock index does not reflect the current economic situation. If the market then loses its optimism about future growth, it will become critical for stock markets, and capital will begin to seek its way into safe havens, as is currently being observed in the gold market.
Adidas Shines, Infineon on the Decline
Among individual stocks, Adidas delivered a strong performance on Wednesday, rising 4.8%. This was followed by Zalando with a 4.1% increase and Airbus with a 3.1% gain.
On the other hand, Infineon Technologies AG had a tough day, with its stock falling 4.9% to become the worst performer in the DAX. After building an upward trend since March, the stock has now reversed course. Infineon appears to be taking the brunt of a broader weakness in the technology sector.
Seasonal Trends Favor the Bears
On Thursday, the DAX will need to withstand further downward pressure. It is difficult to say whether the correction is over. A look at the seasonal data suggests that the DAX might only be at the beginning of its correction. According to seasonal data from the past 10 years, a reversal is not expected until the end of September. This presents a bleak outlook for investors.
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.