Markets Rally on Ceasefire Optimism & Fed Cut Hopes | DAX Eyes Record High

Market Overview

APAC equities were mostly higher, tracking the tech-led rebound on Wall Street where both the S&P 500 and Nasdaq 100 posted fresh record highs. Sentiment improved further after reports that Israel and Hamas agreed to a first-phase Gaza ceasefire, while Chinese traders’ return from the Golden Week holiday added volume.

US indices:

• S&P 500: +0.58% at 6,754
• Nasdaq 100: +1.19% at 25,137
• Dow Jones: Flat at 46,602
• Russell 2000: +1.04% at 2,484

US macro: The FOMC Minutes reinforced a cautious stance, with most participants expecting further easing this year but acknowledging lingering upside inflation risks. Market reaction was muted.

DAX Technical Analysis

The Germany 40 (4H) has retested and held the 24,510 breakout zone, resuming its advance toward the all-time high at 24,648. The index is now trading in a tight bullish range near the upper Bollinger Band, indicating continued strength but also near-term overextension risk. The RSI (66.7) remains in bullish territory but not yet overbought, while the MACD has turned positive again with a subtle uptick in the histogram — signaling renewed upsde momentum after a brief consolidation phase.

Structurally, the DAX maintains a clean breakout-and-retest pattern: after clearing 24,510, buyers successfully defended that level, establishing it as new support. The next resistance is the all-time high at 24,648, with potential extension toward 24,800 if momentum follows through. On the downside, initial support rests at 24,450 and 24,300 (the 20 EMA), while the 200 EMA around 23,900 remains a key trend-defining floor. Overall tone: bullish continuation, with momentum building for a potential new record high if the 24,650 level is decisively cleared.

Key Developments

Monetary Policy

• FOMC Minutes: Majority supported a 25bps rate cut in September; one member (Miran) preferred 50bps. Most saw growing downside risk to employment and diminishing upside risk to inflation. Several judged policy as not overly restrictive, warranting a gradual and data-dependent approach.
• Fed participants remain cautious about further moves amid uncertainty on inflation dynamics.

Trade & Tariffs

• The Trump administration may exclude generics from its proposed pharma tariffs (WSJ).
• China introduced export controls on rare earths effective December 1, requiring export licenses for dual-use materials and banning shipments tied to WMD or military uses.
• Vietnam to continue trade negotiations with the US through October and November.
• Canadian PM Carney met President Trump, noting a “meeting of minds” on steel and auto industries and suggesting bilateral deals alongside the USMCA.

US Political Developments

• The government shutdown continued as both Democrat and Republican bills failed in the Senate.
• President Trump said most federal workers will receive back pay and that military personnel will likely continue to be paid.
• The IRS will furlough 34,000 employees.
• House Minority Leader Jeffries supports a standalone bill to pay troops.

Regional Market Summary

APAC

• Nikkei 225 extended its rally, led by tech strength mirroring US peers.
• ASX 200 marginally higher, supported by miners but held back by tech and financials.
• Hang Seng and Shanghai Comp diverged: Hong Kong lagged while Mainland China outperformed after reopening; Hang Seng Bank surged >26% as HSBC proposed to take it private.
• US futures steady; Euro Stoxx 50 futures -0.3% indicate a softer European open.

FX

• DXY paused its recent rise; FOMC Minutes added little new information.
• EUR/USD rebounded from 1.16 amid French political stabilisation.
• GBP/USD recovered from sub-1.34 despite limited BoE policy impact.
• USD/JPY steady above 150.00; Takaichi-related optimism fading as policy timing uncertain.
• NZD/USD retraced RBNZ-related losses amid improved risk sentiment.
• PBoC fixed USD/CNY at 7.1102 (stronger than expected).

Fixed Income

• USTs flat after weak 10-year auction and hawkish Fed tone.
• Bunds steady near 129.00 ahead of German Trade Data and ECB Minutes.
• JGBs slightly firmer post 5-year auction results in line with prior.

Commodities

• Oil eased on Gaza ceasefire optimism and hostage-release reports.
• Gold dipped from record highs but remained supported near USD 4,000/oz.
• Copper gained modestly as China trading resumed.
• UK grid operators confident in winter energy supply; peak gas demand seen at 182 MCM vs. 565 MCM supply.

Crypto

• Bitcoin declined below USD 122k after recent highs.

Geopolitics

Middle East

• US President Trump confirmed Israel and Hamas have signed the first phase of a peace plan, including hostage releases and troop withdrawals.
• Israeli cabinet to ratify the deal Thursday; first releases expected this weekend.
• Hamas and Qatar confirmed the agreement covers a ceasefire, prisoner swaps, and aid entry.
• Trump suggested potential visits to Israel and Egypt after a routine health check.
• US Secretary of State Rubio will not attend France’s post-war Gaza conference.

Asia-Pacific Security

• Taiwan Defence Ministry warned that China is escalating hybrid warfare, using AI-driven cyberattacks and botnets to undermine public trust and digital infrastructure.
• UN plans a 25% reduction in peacekeeping due to funding shortfalls.

Europe & UK

• France: Caretaker PM Lecornu declared his mission complete; President Macron expected to appoint a new PM within 48 hours. Budget path likely by year-end.
• UK: RICS Housing Survey (Sep) came in at -15.0, better than expectations (-18.0).