DAX Consolidates: Markets Eye Powell at Jackson Hole

1. Market Overview

• Asian Equities
  • Broadly flat on Tuesday; MSCI Asia ex-Japan down 0.1%.
  • Japan’s Nikkei hit a new intraday record, then retreated.
  • SoftBank fell 2.5% after revealing a $2B stake in Intel.
• US & European Futures
  • US Futures: S&P 500 & Nasdaq down 0.1%.
  • Europe: DAX +0.1%, FTSE +0.2%.
• Oil & Commodities
  • Brent down -0.6%, WTI down -0.7% amid Russia–Ukraine peace hopes.
  • Spot gold up 0.2%, benefiting from geopolitical hedging.

2. Fed Outlook & Jackson Hole Symposium

• Jackson Hole (Aug 21–23)
  • Markets await Powell’s speech on policy outlook.
  • No Q&A session expected.
  • 83.6% chance of a 25bp cut in September currently priced in.
  • Risk of market disappointment if Powell avoids clear guidance.
• Upcoming Fed Events
  • FOMC Minutes (July) due Wednesday, August 20 at 11:00 AM.
  • Focus: clues on dovish shift, inflation, and labor market interpretation.

3. Russia–Ukraine Diplomatic Momentum

• Positive Developments
  • Zelensky: Security guarantees could be finalized within 10 days.
  • Warmer tone after talks with Trump and European leaders.
  • NATO's Rutte: Talks were “very successful.”
  • Russia’s Dmitriev called Monday an “important day of diplomacy.”
• Next Steps
  • Plans in motion for a Trump–Zelensky–Putin trilateral summit.

4. FX & Bond Market

• Dollar Movement
  • DXY steady after +0.2% prior day.
  • USD/JPY down 0.1% to ¥147.78.
  • EUR/USD steady at 1.1663.

5. “Value vs Growth” Trend

• Europe
  • Value stocks (especially banks) outperformed growth stocks by 18 percentage points YTD.
  • Bank stocks up ~50% in Europe.
• US
  • Growth stocks outperform value by ~3 percentage points.
  • Value stocks at historic lows vs growth (led by tech outperformance).
  • Preferred sectors: European banks & US IT.

6. Crypto Developments

• Policy Support
  • New SEC Chair working on “Project Crypto” to ease crypto trading.
  • Federal Reserve to stop monitoring banks’ crypto activities.

7. US-Intel Stake Consideration

• Trump Administration
  • Reportedly considering a 10% equity stake in Intel.
  • Could convert Chips Act grants into equity, exact stake not finalized.

8. World News & Policy

• India’s Tax Overhaul
  • PM Modi announces sweeping GST reform.
  • Daily essentials and electronics to become cheaper from October.

9. Macro Calendar Highlights

• Tuesday, August 19
  • US Housing Data
    • Building Permits (Jul): Expected at 1.4M
    • Housing Starts (Jul): Forecast at 1.3M
• Wednesday, August 20
  • FOMC Minutes from July.

10. Earnings Calendar – August 20

Company	Ticker	Expected EPS	Market-Implied Move	Notes
Lowe's	LOW	$4.24	±$9.27	Avg vol: 3M shares
Target	TGT	$2.06	±$7.87	Avg vol: 6.3M shares
Baidu	BIDU	$1.32	±$4.49	Avg vol: 3.8M shares
Estee Lauder	EL	$0.08	±$8.30	Avg vol: 4.1M shares

11. DAX Technical Setup outlook

The Germany 40 CFD (DAX) has recently exhibited a notable breakout from a downward sloping resistance line that had constrained price action for weeks. After testing the lower boundary of a rising channel around early August, price rebounded sharply and pierced through the descending triangle pattern, confirming bullish momentum. This breakout was supported by a surge above the 50-, 100-, and 200-period EMAs on the 4-hour chart, which now align in a bullish sequence. The RSI is stable around the 50–60 zone, and the Stochastic RSI is rebounding from oversold territory—both indicators suggest there's room for continued upward movement without being overextended.

From a slightly bullish perspective, this structure shift is encouraging. The successful retest of prior support (around 23,500–23,600) and subsequent strong push higher sets the stage for a challenge of the previous high near 24,650. If bulls can defend the breakout zone and maintain the price above the EMAs, further upward continuation could be anticipated. Traders may look for consolidation above the breakout point as a signal of strength, particularly if momentum indicators continue to trend higher. However, failure to hold the recent gains and a breakdown below the EMAs again would cast doubt on the validity of this breakout.