The German DAX continues to see a bit of noisy behavior, as the markets are watching interest rates and energy issues going forward. The industrial base remains and area of concern for me.
DAX
The German index was noisy during the trading session on Thursday, dipping well below the €25,250 level only to turn around and rally. A lot of what we have seen is based on oil, and the turnaround was actually based on claims that the Americans and the Iranians might be looking to open up the Strait of Hormuz in a phased manner. If that is, in fact, what is going on, then it is a huge deal.
The interest rates in Germany remain elevated
After all, when you look at the German prospects going into the winter, if they do not have access to cheap and abundant energy, it is going to be a major problem for that industrial base that is such a big driver of the DAX. Interest rates in Germany remain elevated, with the 10-year yield roughly 3.59%. Concern about the overall lack of energy is something that will remain a major problem.
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Technically speaking, the market is between the 200-day EMA, which is sitting at the €25,000 level, and the 50-day EMA at the €25,700 level, and we are basically in the middle of that. It does make a certain amount of sense that we would see some noise.
It is worth noting that some of the moves in the DAX have been softened and have shown signs of life due to the stronger German IFO reading, but it is more about the potential peace progress between the United States and Iran. Some of the bigger moves include Infineon dropping 3% and SAP dropping 2%, while Allianz gained 1.6%, helping soften some of that negativity.
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