DAX continues to push higher, as US equities hope to rebound after durable goods led selloff
- DAX continues to outperform as it looks for an 8th consecutive weekly gain
- Spanish inflation a warning sign although eurozone inflation expectations fall
- US markets look to rebound after recent short-term pullback
The FTSE 100 has found itself lagging its mainland European peers once again this morning, with the DAX continuing its impressive push that looks set to establish an eighth consecutive weekly gain for the German bourse. While many will note a potential disconnect between the economy and the stock market, but we are ultimately seeing how the German DAX can be heavily influenced by a handful of names in the same way as their US counterparts. The international focus for many of these stocks do provide a buffer from the ongoing economic concerns in Germany, while the prospect of a dovish pivot from the ECB in the coming months does provide the basis for continued optimism from European investors.
Higher than expected Spanish inflation provided a warning sign of what could be around the corner as we kick off a period that culminates in the eurozone CPI release in a week’s time. Things have changed from the situation faced in mid-2023, with Spain managing to drive CPI back down to 1.9% in June. However, with the March monthly figure of 0.8% released today, we can see some cracks in the prospective pathway back down to target. Nonetheless, with the wider eurozone figure expected to fall back down below 2% by the end of H1, markets have grounds for optimism as things stand. The release of eurozone consumer sentiment data further hammered home the need for rate cuts, with the March economic sentiment figure continuing to flounder (96.3), while 12-month inflation expectations dropped (12.3 from 15.4).
Looking ahead, a relatively quiet US calendar will likely see traders focus on the ability of equity markets to push through after yesterday’s rebound in durable goods sent stocks lower to the benefit of the US dollar. Growing concerns around the federal reserve’s ability to cut rates in the face of above target inflation should help provide some backbone to the US dollar moving forward, however any short-term periods of weakness for US equities have typically been viewed as an opportunity to buy the dip. With U.S. markets expected to open in the green, the steady decline seen since Thursday’s peak look like a possible opportunity for the bulls to jump in once again.
Disclaimer: This material is a marketing communication and shall not in any case be construed as an investment advice, investment recommendation or presentation of an investment strategy. The marketing communication is prepared without taking into consideration the individual investors personal circumstances, investment experience or current financial situation. Any information contained therein in regardsto past performance or future forecasts does not constitute a reliable indicator of future performance, as circumstances may change over time. Scope Markets shall not accept any responsibility for any losses of investors due to the use and the content of the abovementioned information. Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
