DAX Defies Polarizing Asian Markets
The new trading week begins as volatile as the last one ended on Friday. The impulse continues to come from Asia. The Chinese government has once again announced measures to support the economy. Restrictions on the purchase of real estate in certain metropolitan areas have been lifted. Additionally, banks have been instructed to drastically lower mortgage rates by the end of October. The markets responded positively, and a rally was triggered in the stock markets. The index of Chinese property developers rose by 10% in Hong Kong. The mainland real estate index CS 300 Real Estate increased by 9%. Broader stock indices posted gains between 3% and 5.5% by early morning. An exception was the Hang Seng, which recorded a "mere" 1.5% gain (as of 6:00 AM CET).
The situation was quite different in Japan. Tomorrow, the new Prime Minister Shigeru Ishiba will be sworn in. He already caused confusion at the first press conferences. Ishiba announced that monetary policy must remain loose to continue supporting the economy in the future. This is contrary to the new direction of the Bank of Japan (BoJ), which aimed to return Japan to a normal interest rate environment. The next rate hikes for December had already been priced in by the market. Additionally, weak data on industrial production was reported today. It decreased by 3.3% compared to the previous month, whereas a decline of 0.9% was expected. Production stoppages in the automotive industry were cited as the explanation. Due to a typhoon, some car manufacturers had to temporarily halt production, leading to a decrease of about 10%. The Nikkei 225 suffered from these uncertainties and trended weakly today. By 6:00 AM, it had lost 1,777 points or 4.42%.
DAX Stable
The DAX was traded unchanged from Friday's close at 19,472 points in Asian trading. It recovered significantly from the late Friday trading session. On Friday, the DAX fell to 19,375 points in late trading. Currently, China's economic aid measures are considered more important than Japan's economic policy direction.
DAX Today
Short-term profit-taking is currently immediately used to enter the DAX "long." The current upward trend continues to be fueled by interest rate cut euphoria and the revival of China. It goes without saying that, in our view, the market is already overheated. Today, we are gritting our teeth and buying the DAX at the previous day's level. The stop-loss is set tighter. It would not be wise to go against the current trend. If the DAX does not continue to rise today, we will immediately cut the long position and switch to short. We no longer see the current stock market culture in line with the political and economic situation in Europe. It seems the motto "It can only get better" is currently being traded.
Economic Calendar Today (Filtered):
01:50 JPY Industrial Production (Month) (Aug)
01:50 JPY Forecast for Industrial Production - 1 Month Ahead
01:50 JPY Large Retailers' Sales (Year) (Aug)
01:50 JPY Retail Sales (Year) (Aug)
03:30 CNY China PMI Composite (Sep)
03:30 CNY Manufacturing PMI (Sep)
03:30 CNY Non-Manufacturing PMI (Sep)
03:45 CNY HSBC Manufacturing PMI (Sep)
03:45 CNY Caixin Services PMI (Sep)
08:00 GBP Current Account (Q2)
08:00 GBP Gross Domestic Product (GDP) (Quarter) (Q2)
08:00 EUR Germany Import Price Index (Month) (Aug)
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