DAX still caught in sideways range – What else is brewing?

Markets Overview

US stock indexes closed higher on Monday, led by strong gains in the Nasdaq. The standout drivers were Alphabet (GOOGL), which hit the historic milestone of a USD 3 trillion market cap, and Tesla (TSLA), which rallied after CEO Elon Musk disclosed nearly USD 1 billion in share purchases. Other mega-cap tech names like Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN) also added to the upside. However, losses in Nvidia (NVDA), tied to ongoing Chinese antitrust investigations, capped broader market gains.

Sector performance was uneven: heavyweights like communication services, consumer discretionary, and technology led the advance, while consumer staples and healthcare lagged. Market breadth was negative, with roughly 200 stocks rising against 300 decliners.

Meanwhile, Treasury yields moved lower after a weak NY Fed Manufacturing survey heightened concerns about the US economy. Investors are now focused on upcoming US Retail Sales (Tuesday) and the Federal Reserve’s policy decision (Wednesday).

Key Movers

• Tesla (+3.6%): Jumped after filings revealed Musk’s first open-market purchase since 2020, a move seen as a strong show of confidence.
• Alphabet (+): Surged past the USD 3 trillion valuation mark, boosting the communication services sector.
• Nvidia (-): Edged lower after Beijing accused it of violating anti-monopoly laws.
• CoreWeave (+7.6%): Spiked after sealing a USD 6.3 billion deal with Nvidia, despite Kerrisdale Capital announcing a short position.

The S&P 500 rose 0.47%, the Nasdaq climbed 0.94%, and the Dow added 0.11%, with both the S&P and Nasdaq touching new intraday record highs.

Global Market Context

Asian markets extended their rally to multi-year highs, supported by expectations of a Fed rate cut and guidance on future easing. The US dollar weakened while oil prices firmed.

In China, both factory output and retail sales posted their slowest growth since last year, adding pressure on Beijing to roll out additional stimulus.

Geopolitical developments are also weighing on sentiment. Reports suggest the US could move forward with a TikTok ban if Beijing doesn’t soften its stance on tariffs and tech restrictions in a potential divestiture deal. Meanwhile, US Democrats have urged the administration to pressure China on “structural overproduction.”

Policy and Outlook

The Congressional Budget Office (CBO) updated its forecasts, noting that growth is likely to stay subdued in the near term due to tighter immigration policies and higher import tariffs. However, from 2026 onward, fiscal incentives and tax cuts are expected to drive a rebound in GDP growth to 2.2%.

The Federal Reserve is widely expected to resume rate cuts tomorrow, with markets fully pricing in a 25bps reduction. Updated economic projections and the dot plot will be closely watched to see if policymakers diverge from current market expectations of over 1.3 percentage points of cumulative cuts by Q3 2026.

Geopolitics

• Middle East: Tensions escalated after reports of an Israeli strike on Qatar, though conflicting accounts emerged about US involvement. US President Trump warned Hamas against using hostages as human shields, while Gulf leaders called an emergency summit in Doha.
• Russia-Ukraine: The UK announced RAF Typhoon deployments over Poland as part of NATO’s mission. Poland reported neutralizing a drone over government buildings and detaining two Belarusians. Meanwhile, Warsaw is boosting cybersecurity spending to EUR 1bn after suspected Russian sabotage attempts. Japan, for its part, signaled willingness to coordinate with the G7 on tightening sanctions.

DAX Technical Analysis 4 hours

The Germany 40 (DAX) index continues to oscillate within a tight triangle formation on the 4H chart, bounded by converging support and resistance trendlines. The price has consistently respected the ascending support trendline since early July, with recent higher lows forming a base above 23,500. The narrowing structure reflects waning volatility, a classic sign of an impending breakout. The RSI remains neutral near 50, while the Stochastic RSI shows signs of upward crossover, indicating a short-term bullish bias, but still lacks momentum confirmation.

From a broader technical view, the price remains below the key EMAs (20, 50, 100, 200), which are all sloping downward and stacked bearishly, reflecting medium-term selling pressure. The upper boundary of the triangle remains aligned near 23,900–24,000 — a break above this level could open a path toward retesting 24,300 and potentially the 24,648 high. However, failure to sustain above the rising support trendline near 23,500 could accelerate bearish momentum toward the 23,200 zone.