DAX Consolidation - Gold Breaks $4,000 – What is happening?

United States

Equities

US equities sold off Tuesday as large-cap tech weighed on indices. Reports in The Information revealed internal data showing NVIDIA (NVDA) facing profitability headwinds from its chip-rental operations, sparking broad pressure across AI-linked names. Oracle (ORCL) tumbled intraday but pared losses after several analysts defended the stock, citing valuation opportunity.
The Nasdaq 100 led declines, while the Russell 2000 lagged as small caps failed to attract rotation. Treasury futures firmed as equities weakened, and gold extended its rally above USD 4,000/oz, approaching the psychological threshold in spot terms.

Tariffs & Trade

• US–China: President Trump confirmed plans to meet President Xi in South Korea “within weeks.”
• US–Canada: PM Carney said both sides aim for “mutually beneficial” sectoral deals — notably in steel, aluminium, and energy — with swift completion before expanding scope.
• US House Committee Report: Following a months-long probe, lawmakers accused Applied Materials, KLA, Lam Research, ASML, and Tokyo Electron of indirectly supporting Chinese chip production. Recommendations include:
  • Aligning Dutch and Japanese export controls with US measures.
  • Expanding country-wide restrictions on PRC sales.
  • Barring allied manufacturers from supplying additional Chinese military-linked entities.
• Norway: Exempted from EU’s proposed higher steel tariffs and lower import quotas.

Fed & Fiscal Headlines

• Fed Governor Miran (voter):
  • Neutral rate impacted by “unusual population shocks”; policy must ease to align with a lower r*.
  • Sees diminishing uncertainty drag and rising housing importance as inflation’s key driver.
  • Warned against politicizing policy or shifting inflation goals.
• Fed’s Kashkari (2026 voter):
  • Too early to gauge tariff-linked inflation stickiness; sees “stagflation signals.”
  • Bullish on labour market, cautious on housing.
  • Not convinced rate cuts automatically lower mortgage rates; warned that aggressive easing could re-ignite inflation.
• White House:
  • Trump said the shutdown “will eliminate a lot of jobs,” with updates in “four or five days.”
  • Criticized Democrats for lack of leadership; stated AOC and Schumer are “incapable of negotiating.”
  • House Democratic Leader Jeffries: A one-year Obamacare extension is a “non-starter.”
  • Senate: Working on multiple procedural votes (Canada tariff resolution, CRs) per Punchbowl.
  • Farm aid: Administration delayed rollout of up to USD 13bn USDA support amid the shutdown.
  • Clean energy: Considering cancelling an additional USD 12bn in project funding (Semafor).

Asia–Pacific

Equities

Asian markets were mixed, following Wall Street’s negative tone and renewed AI-profitability concerns.

• ASX 200: Rangebound — Healthcare and Financials offset Tech and Consumer weakness.
• Nikkei 225: Fluctuated near 48,000, supported by yen softness but capped by weak wage data.
• Hang Seng: Declined sharply post-holiday; tech underperformed.
• Mainland China: Markets remained closed, reopening Wednesday after Golden Week.
• US futures: Slightly higher (ES +0.1%, NQ +0.1%) as traders attempted to stabilize sentiment.
• European futures: Indicate a flat open; Euro Stoxx 50 futures unchanged after Tuesday’s –0.3% close.

FX

• USD: Firmed further (DXY higher) despite data void and ongoing shutdown.
  • NY Fed SCE: Inflation expectations ticked higher at both 1y and 5y horizons.
  • Fed’s Miran: Reiterated optimism on growth and call for easier policy.
• EUR/USD: Pressured by stronger dollar and French political uncertainty (National Rally rejecting PM Lecornu’s overture).
• GBP/USD: Slipped below 1.3400; light UK data and newsflow offered little support.
• USD/JPY: Advanced beyond 152.00, marking an eight-month high amid weak Japanese wage data.
• AUD/NZD: Soft; NZD underperformed after RBNZ’s 50 bps rate cut to 2.50%, resuming larger easing increments.

Fixed Income

• USTs: Consolidated after Monday’s rally; 3yr auction drew strong demand but limited market impact ahead of the 10yr auction and FOMC Minutes.
• Bunds: Traded directionless; traders await German Industrial Production and new supply.
• JGBs: Hovered near post-election lows on fiscal stimulus expectations despite weak wage growth.

Commodities

• Crude: Firmer but capped by mixed US inventory data and EIA STEO revisions.
  • Private data: Crude +2.8mln (exp. +1.9mln), Distillates –1.8mln, Gasoline –1.2mln, Cushing –1.2mln.
  • EIA STEO: Raised 2025 oil demand forecast, steady for 2026; both production forecasts revised higher.
  • ADNOC: Set Nov Murban OSP at USD 70.22/bbl (vs 70.10 Oct).
• Gold: Spot extended above USD 4,000/oz, tracking futures strength amid safe-haven demand.
• Copper: Flat, constrained by muted risk appetite and Chinese holiday closure.

Crypto

Bitcoin lacked direction, oscillating around USD 122k, erasing earlier intraday gains.

Notable Asia-Pacific Headlines

• RBNZ: Cut OCR by 50bps to 2.50% (vs 25–50bps split expectations).
  • Open to further easing; inflation projected near 2% target midpoint by H1 2026.
  • Minutes revealed debate between 25bps vs 50bps, citing spare capacity and disinflation risk.

Data Recap

• Japan Labour Cash Earnings (Aug): +1.5% YoY (exp. 2.6%, prev. 3.4%).
• Real Cash Earnings: –1.4% YoY (exp. –0.5%).

Geopolitics

Middle East

• Trump convened national security officials to review progress in Gaza ceasefire negotiations before envoys Witkoff and Kushner departed for Egypt (Axios).

Russia–Ukraine

• Putin: Accused Ukraine of striking civilian targets deep in Russia; vowed retaliation.
• Ukraine reported over 50 missiles and 500 drones launched overnight; ≥5 killed in attacks.

Europe / UK

• UK: Industry Minister McDonald reaffirmed support for the steel sector, pressing the EC for clarity on tariff impacts.
• ECB’s Lagarde: Urged France to respect budget commitments amid fiscal strain.
• ECB’s Rehn: Warned of downside inflation risks below target, citing EUR strength and wage stabilization.

DAX Technical Analysis

The Germany 40 (4H) is consolidating just below the 24,510 resistance zone after stabilizing from its recent breakout. Price has rebounded off the 20 EMA (~24,300) and is now testing the upper Bollinger Band, suggesting a potential attempt to resume the uptrend. The RSI (61.6) shows healthy mid-range momentum, not overbought, while the MACD has flattened but remains above the signal line, implying that downside momentum has stalled and buyers may be regaining control.

Structurally, the index is forming a tight continuation pattern between 24,200–24,510, which could act as a bullish flag or consolidation range before another leg higher. A sustained break above 24,510 would open the path toward the all-time high at 24,648, while a failure to hold above 24,200 risks a retest of the 20 EMA or even the 200 EMA (~23,950) for trend validation. As long as price remains above 23,900, the bias stays constructively bullish, with momentum likely to rebuild on a breakout confirmation.