DAX Struggles at Key Level as Tariff Fears Mount

Market Overview

• US Stocks Dip
  • Tariff concerns weighed on sentiment.
  • Companies like Yum Brands and Caterpillar flagged cost pressures.
• US Services Sector
  • ISM Services PMI fell to 50.1 in July.
  • Firms report higher input costs and weaker hiring.
  • Rising tariffs contribute to stagflation fears.
• US Manufacturing & Labor
  • ISM Manufacturing Index dropped to 48.0 – lowest since Oct 2024.
  • Employment subindex fell to 43.4; indicates job market weakness.
  • New orders stagnate; prices hit highest since Oct 2022.
  • Tariff/trade policy uncertainty impacting planning.
• Fed Expectations & Treasuries
  • Markets price in 94% chance of a September rate cut.
  • 10-year yields near multi-month lows before $42bn auction.
• Earnings Season
  • ~80% of S&P 500 beat Q2 expectations.
  • Focus now shifts to upcoming Disney and McDonald’s results.

Geopolitical & Policy Updates

• Tariff Rhetoric Escalates
  • Trump threatens new tariffs on semiconductors and pharmaceuticals.
  • Possible trade deal with China hinted.
  • New Fed governor nomination expected by weekend.
• UK Monetary Policy
  • BoE likely to cut rates from 4.25% to 4.0%.
  • Growth/inflation forecasts to guide future rate paths.
  • Financial conditions remain tight despite prior cuts.
  • Fiscal policy under scrutiny – bond yields stay elevated (~4.5%).
  • Next budget test in November from Finance Minister Rachel Reeves.

Global Markets

• Asia
  • Mixed equity performance.
  • Japan and Australia outperformed.
  • Brent oil edged up 0.1% to $67.78.
  • Gold remained near 1-week high.
• China’s Bank Sector
  • MSCI China Banks Index +12% YTD, outperforming broader market.
  • Boosted by:
    • Fiscal support for real estate and local government finances.
    • Lower credit risks and stronger capital buffers.
    • Rising loan demand (+5% YoY in June).
  • Valuations remain attractive (P/E 5.91 vs 12.1 market average).

Corporate & Tech News

• xAI Launches Grok Imagine
  • Generates videos from text/images.
  • “Spicy mode” allows suggestive content for premium users.
  • Reflects Elon Musk’s push for fewer AI restrictions.
  • Raises ethical concerns over deepfakes and misuse.
• Apple’s AI Plans
  • Building ChatGPT-style “answer engine” under new internal team.
  • Aims to reduce reliance on Google search tools.
  • Could integrate into Siri, Safari, and other Apple products.
  • May reshape Apple’s assistant and search experience.
• NASA Satellite Shutdown
  • Trump admin orders termination of two CO₂-monitoring missions.
  • No official reason, but linked to climate change skepticism.
  • Could harm climate tracking, forecasting, and science.

Crypto & Digital Assets

• Bitcoin Milestone
  • Closed July at $115,644 – highest monthly close ever.
  • Absorbed $9B transfer from a Satoshi-era wallet.
  • IMF-led update to SNA includes crypto in national wealth data.
  • Crypto now counted as “non-produced nonfinancial assets.”
• Ethereum Treasury Surge
  • 20 straight days of net ETF inflows in July, $5.4B total.
  • 1.26 million ETH (~1% supply) bought by corporates since June.
  • BitMine is the largest public ETH holder (833k ETH).
  • Institutional focus on ETH’s staking, DeFi, and programmability.
  • Standard Chartered forecasts ETH treasury share to grow to 10%.

DAX Technical Analysis 4 hour

The DAX has bounced back after a deep pullback, recovering above the 200 EMA and re-entering the former ascending channel. However, the price remains below the confluence of the 50 EMA and prior horizontal resistance at 23,950–24,000, which continues to act as a key pivot zone. The latest candle suggests rejection from this area, keeping near-term momentum uncertain.

The RSI has returned to neutral territory near 50, while the Stochastic RSI is approaching overbought levels, suggesting potential slowing in bullish momentum. Bulls will want to see a break and close above 24,000 to confirm a continuation of the rebound, while failure to hold above the 23,860 zone could trigger another leg lower. Price action remains caught between the moving averages and the boundaries of the previous consolidation structure, making the next breakout direction crucial for short-term bias.

 

--Written by Philip Papageorgiou – Market Analyst
-Follow me on  X ex Twitter: PhilipForexCom