DAX falls as US sell-off hits European stocks
- US stocks fell on slowdown fears
- German composite PMI falls to 48.4
- DAX eases away from ATH
The DAX is heading southwards but has recovered from session lows. Market mood remains weak after yesterday's sell-off in U.S. stocks.
The DAX fell to a two-week low as global markets remain rattled by fears of a slowdown in the US and weakness in the Chinese economy. US indices fell sharply yesterday, posting their biggest daily decline in a month as sentiment was hit by weak manufacturing data.
As well as weakness from the USD, China's service PMI also disappointed, unexpectedly falling to 51.6 from 52.2.
Today, the German composite PMI, which is considered a good gauge for business activity, fell to 48.4, down from 48.5, below the level 50 that separates expansion from contraction. Service sector activity was also weaker, at 51.2, down from 51.4 in July.
Attention will now turn to US data this afternoon with the JOLTS job openings and factory orders in focus for a jittery market ahead of Friday's non-farm payroll report.
DAX forecast -technical analysis
The DAX has recovered from 17,230 the early August low, rising into resistance and an ATH of 18970. The price has corrected lower, but the uptrend remains intact, and the longer lower wick on today's candle suggests that demand was limited at the lower price.
Buyers will look to rise back above the 18930-18970 zone to extend to new ATHs.
Sellers will need to test minor support at 18300 ahead of the 18000 round number. A break below here exposes the 200 SMA.
GBP/USD holds above 1.31 with more US data in focus
- UK services PMI rose to 53.7 in August
- US JOLTS job openings & factory orders in focus
- GBP/USD eased back from 1.3265 high
GBP/USD is holding steady just above 1.31, recovering from deeper losses earlier in the day.
The risk-off mood is keeping the US dollar supported even as the UK service sector gained momentum in August.
UK services PMI rose to 53.7, up from 52.5, and holds above the neutral level of 50, which separates expansion from contraction for a tenth straight month.
The post-election upturn in business activity and new orders was sustained in August and was accompanied by easing inflationary pressures across the economy.
Meanwhile, the US dollar is rising after a steep selloff yesterday following weaker-than-expected US ISM manufacturing data, which fueled the recession worries.
The market is jittery as attention turns to JOLTS job openings, which will provide some clues about the health of the US jobs market ahead of Friday's non-farm payroll report. Whilst expectations are for job openings to remain steady, the ratio between job openings and unemployed looking for work is expected to be its lowest level in three years.
GBP/USD forecast – technical analysis
After running into resistance at 1.3260, GBP/USD has corrected lower, re-entering the rising channel and breaking below 1.3140 the July ’23 high.
Sellers could look to extend the bearish move towards 1.30, the psychological level. A break below here negates the near-term up trend.
Meanwhile, buyers will need to retake 1.3140 to bring 1.32, the rising trendline resistance ahead of 1.3265, the 2024 high.
