DAX at critical support, Gold Hits Record: Markets in Focus

1. Equity Markets

• Japan – Nikkei milestone:
  • Crossed 44,000 for the first time, touching 44,185 (+1.2%) before paring gains.
  • Drivers: optimism over stimulus prospects and tariff relief.
• Chip stocks lead rally:
  • Advantest +7%, Screen Holdings, Tokyo Electron, Sony all higher.
  • Following strength in US tech.
• US markets:
  • Nasdaq closed at a record, led by Broadcom.
  • Robinhood and AppLovin surged on S&P 500 inclusion.
• Europe:
  • Stocks supported by easing political worries and US data.
  • Investors awaiting ECB decision on Thursday (rates expected to be held).

2. Policy & Stimulus Developments

• Japan:
  • PM candidate Sanae Takaichi seen favoring fiscal expansion + monetary easing, lifting sentiment.
  • Trade boost: US tariffs on autos to be lowered by Sept 16 (negotiations ongoing, details still unresolved).
• Bank of Japan:
  • Nominal wages +4.1% YoY (July) – strongest in 7 months.
  • Real wages +0.5%, first positive since December.
  • Household spending +1.4% YoY, 3rd straight month of growth.
  • Governor Ueda signals October rate hike possible, though tariff risks could delay.

3. US Data & Fed Outlook

• Labor market weakening:
  • August NFP: only 22,000 jobs (vs. 75k expected).
  • Unemployment up to 4.3%.
  • Wage growth: +3.7% YoY, softer than expected.
  • Trend: only 30k jobs/month past 3 months.
• Market reaction:
  • Rate cut Sept 17 seen likely (~30bps priced in).
  • Yields and USD fell.
  • Gold hit fresh record highs.
  • Equities got only short-lived lift.

4. Europe – France’s Political Risks

• French bonds:
  • 10yr yield fell to ~3.45%, lowest in 2 weeks.
  • Supported by weak US data and global rate-cut expectations.
• Political crisis:
  • PM François Bayrou faces likely defeat in confidence vote.
  • Risks: government collapse, budget delays, or new elections.
  • Focus also on ECB meeting and Lagarde’s tone on growth vs. inflation.

5. DAX Technical Analysis 4 hours

The Germany 40 (DAX) continues to trade within a well-defined, medium-term ascending channel, bounded by higher lows and contained highs. After bouncing off the channel's lower boundary near 23,400 in early September, the index has since recovered toward the midline, with short-term support from the 20-period EMA. However, the price remains capped under the descending upper resistance line from mid-August, and multiple attempts to break above it have failed. The current price action appears to form a bear flag or rising wedge, signaling possible downside continuation if the index loses momentum.

Momentum indicators support the idea of caution. The RSI sits just above the neutral 50 mark, showing no clear bullish conviction, while the Stochastic RSI hovers near overbought territory after a recent upward crossover, suggesting limited room for further gains unless supported by strong buying volume. Overall, while the trend remains technically intact to the upside within the channel, the structure and waning momentum favor a more cautious or slightly bearish stance in the short term unless the price decisively breaks above the 24,200–24,300 resistance zone. A break below 23,600 would invalidate the channel and open the way for a deeper correction.

6. Precious Metals

• Gold:
  • Jumped to new record highs above $3,550/oz, benefiting from falling yields & USD.
• Silver:
  • Reached ~$41/oz, highest since 2011.
  • Drivers:
    • Fed easing bets → lower opportunity cost.
    • Industrial demand from solar, EVs, electronics.
    • Supply constraints (mostly mined as by-product).
    • China solar exports +70% in H1 (esp. to India) lifting physical demand.
  • Forecasts: structural deficit into 2025 may support further gains.

7. Seasonal Market Patterns Debunked

• “Sell in May, buy in September” myth:
  • Historically: STOXX 600 outperformance of +1.6pp annually if followed.
  • But most years produced lower returns than buy-and-hold.
  • Example 2025:
    • STOXX 600 +4% (May–Sept).
    • MSCI World +13%.
    • S&P 500 +14%.
  • Message: investors risk missing gains + incur costs by following seasonal rules.

8. Autos – Structural Weakness

• Global auto sales: stagnating in H1 2025.
• Europe: demand still weak, only ~80% of 2019 levels.
• US: sales up 4% YoY, but largely pulled forward ahead of tariffs.
• Challenges:
  • ~50% of US car sales are imports, still facing high tariffs.
  • Margins pressured; analysts cut profit forecasts:
    • 2025: -36.7%
    • 2026: -3.3%
    • 2027: -1.9%
  • Weak outlook for European automakers.

9. Corporate Earnings & IPOs

• Earnings today:
  • GameStop – focus on turnaround progress. Announcement to purchase BTC. MEME status.
  • Oracle (after-market):
    • +39.7% YTD on AI-driven cloud growth.
    • Q1 FY2026 earnings watched for:
      • AI/cloud revenue momentum (+40% expected).
      • Large contract wins ($30B+ pipeline).
      • Gemini access deal with Google.
      • Overseas infra expansion ($3B in Germany/Netherlands).
      • Capex balance vs. AI demand.
• IPO spotlight – Klarna:
  • Aiming to raise $1.27B at $14B valuation.
  • Down sharply from 2021 peak ($45B) but up from 2022 trough ($6.7B).
  • Expanding beyond BNPL → debit cards, mobile banking, potential license.
  • Profitability remains uncertain after Q2 losses ($50–100M).
  • Seen as test of fintech IPO appetite.

-By Philip Papageorgiou – Market Analyst
-Twitter: PhilipForexCom