DAX Barely Holds Previous Day's Level
Currently, the DAX knows only one direction: upward. Yesterday, the 19,000-point mark posed no challenge, and the German leading index climbed incessantly to 19,238 points. Even in after-hours trading, the DAX continued to rise and was able to slightly surpass the 19,300-point mark in New York.
However, this level was not maintained in Asian trading, even though the Chinese indices started the last trading day of the week on a friendly to firm note. The Hang Seng was the leader at the end of the week, gaining 615 points or 3.08% by 5:10 AM, which is a weekly gain of over 13%, the best result since 2008. Initially, the Japanese Nikkei 225 followed this trend but gave up its gains and was only slightly in the plus early in the morning. The reason was the inflation data for Tokyo, which hit the desired 2% mark, down from 2.4% in August. This clears the way for another interest rate hike in December or January. Such news is unwelcome on the stock markets. Additionally, the LDP starts electing a new leader today.
DAX Today
The current market sentiment could hardly be better, and participants are becoming greedy, already seeing the DAX at 20,000 points. Such market situations are dangerous. In our view, the market is overheated. Profits are reluctantly realized because prospects are still too bullish. This mindset often leads to sharp and rapid corrections. Once profits are taken, stubborn holders follow, leading to a wave of selling. We do not expect this scenario today, but we are on the verge. We can expect a steady DAX opening today. However, we do not see rising prices anymore. We are selling the DAX pre-market today, not expecting significant declines, as the PCE Price Index (Personal Consumption Expenditures Price Index) in the USA will be released at 2:30 PM CET. This index is taken very seriously by the Fed as a measure of inflation.
In summary: We are selling the DAX today and, as usual, trying to close positions as early as possible before the weekend.
Economic Data Today (Filtered):
01:30 JPY Consumer Price Index (CPI) (YoY) (Sep)
01:30 JPY Tokyo CPI - Core (YoY) (Sep)
01:30 JPY Tokyo CPI Excl. Food and Energy (MoM) (Sep)
03:30 AUD RBA Financial Stability Review
03:30 CNY Chinese Industrial Profits YTD (Aug)
07:00 JPY Leading Index (Jul)
08:45 EUR Producer Price Index (PPI) (YoY) (Aug)
09:55 EUR German Unemployment Rate (Sep)
09:55 EUR Unemployment (Sep)
11:00 EUR Business Climate (Sep)
11:00 EUR Consumer Confidence (Sep)
11:00 EUR Consumer Inflation Expectation (Sep)
14:30 USD Goods Trade Balance (Aug)
14:30 USD PCE Price Index (MoM) (Aug)
14:30 USD Personal Income (MoM) (Aug)
14:30 USD Personal Spending (MoM) (Aug)
14:30 USD Real Personal Consumption (MoM) (Aug)
14:30 USD Retail Inventories Excl. Autos (Aug)
14:30 USD Wholesale Inventories (MoM) (Aug)
14:30 CAD GDP (MoM) (Jul)
16:00 USD UoM Consumer Sentiment (Sep)
17:00 CAD Budget Balance (Jul)
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