DAX under pressure; ECB projections & US inflation

European Central Bank (ECB)

• Rates unchanged, focus on updated projections.
• Inflation outlook:
  • 2025: 2.1% (slightly higher than before)
  • 2026: 1.7%
  • 2027: 1.9%
• Growth outlook:
  • 2025: 1.2% (up from 0.9%)
  • 2026: 1.0% (slightly lower)
  • 2027: 1.3% (unchanged)
• Lagarde’s stance: Risks to growth are now more balanced; defense spending, infrastructure investment, and productivity could support the economy.
• Market expectations:
  • No further rate cuts likely in 2024.
  • Around 50% probability of a cut by mid-2026.
  • Bloomberg sources: Policymakers see no need for more cuts unless a major shock occurs; October cut ruled out, December reassessment possible with new 2028 forecasts.

DAX Technical Analysis 4 hour chart

The Germany 40 (DAX) continues to respect a broad ascending channel, with the lower trendline consistently acting as a key support level. After recently bouncing off this support around the 23,450–23,500 zone, price action has shown some recovery, although it remains constrained beneath the 50, 100, and 200-period EMAs, which have now aligned downward — a signal of continued bearish pressure. The short-lived rebound towards the 23,800 region encountered resistance near the EMA confluence, failing to sustain bullish momentum and quickly reversing lower.

Momentum indicators reflect indecision and lack of conviction. The RSI is hovering around 42, showing mild bearish bias but not oversold, while the Stochastic RSI appears to be attempting a bullish crossover from oversold territory. This could signal another test of the 23,800 level, but unless bulls reclaim and close above the EMAs convincingly, further downside retests of the rising channel support remain likely. Until then, the broader pattern suggests the index is stuck in a grinding corrective phase, with potential for another leg down should the ascending trendline finally give way.

United States – Inflation & Labor Market

• CPI (August):
  • Headline: 2.9% YoY (vs. 2.7% prior), driven by electricity, flights, and hotels; fuel prices fell.
  • Core CPI: steady at 3.1% YoY.
  • Markets showed muted reaction since tariffs had already been priced in.
• Jobless claims: Rose by 27,000 to 263,000 (vs. 235,000 expected), the highest in nearly four years.
• Monetary policy expectations:
  • Fed seen cutting rates by 75 bps by year-end.
  • Futures price a 100% chance of a cut next week, with some risk of a 50 bps move.
• Market impact:
  • US Treasury yields fell.
  • USD weakened slightly.

Wall Street Performance

• Indices: S&P 500, Nasdaq, and Dow closed at record highs.
• Drivers: Strong gains in Tesla (+6%) and Micron (+7.5%) after Citigroup upgrade; semiconductor index hit a new record.
• Corporate movers:
  • Warner Bros Discovery +29% on Paramount Skydance cash bid reports.
  • Centene +9% after reaffirming guidance.

Asia-Pacific Markets

• Followed Wall Street higher, with Nikkei, Kospi, and Taiwan indices hitting record highs, supported by Fed easing expectations.

Amazon – Smart Glasses Initiative

• Projects:
  • Jayhawk: consumer glasses with one-eye display + Alexa for shopping.
  • Amelia: enterprise version for delivery drivers, providing route and task instructions.
• Timeline:
  • Amelia targeted for Q2 2026.
  • Jayhawk expected between late 2026 – early 2027.
• Impact: Positions Amazon to challenge Meta in smart glasses, linking AI-powered wearables directly to its retail and logistics ecosystem.