Downward Spiral Accelerates: DAX Heads Unchecked Toward 22,000
The German leading index is inevitably facing its next severe test. Anyone who had hoped for a sustained trend reversal last week was bitterly disappointed. The three-day upward journey in the middle of the week turned out to be a classic bull trap. The tentative recovery was brutally reversed as early as Thursday, and on a blood-red Friday, downward momentum accelerated dramatically. Hardly anyone on the Frankfurt trading floor currently believes in a miraculous, on-the-spot turnaround. A renewed, merciless stress test of the massive support at 22,000 points is now far more realistic.
Escalation in the Gulf: U.S. Ground Troops and a Hopelessly Divided NATO
The geopolitical powder keg in the Middle East continues to pour oil on the fire. The situation surrounding the war involving Iran is escalating massively: a hopelessly divided NATO and the alarming deployment of U.S. ground troops to the Gulf region are causing sheer panic among investors. The Strait of Hormuz remains the absolute bottleneck and is still impassable for the vast majority of tankers. This chokehold on the global economy is pushing inflationary pressure through the roof via exploding energy prices. It is a fatal predicament that simply cannot be solved economically with tools like higher taxes. If this situation is not defused quickly, the dreaded bear market threatens to become a reality much sooner than buyers would like.
Day of Reckoning: Inflation Data and Trembling Consumers
Fundamental data takes absolute center stage in today's trading session. As early as 10:00 AM CET, the first inflation figures from individual German states will be released, before the decisive consumer price index for all of Germany hits the ticker at 2:00 PM CET. The anxious question: are the war-driven oil price rallies already fully reflecting in the statistics? Even if the massive price shock is only measurable in the coming months, cheers on the trading floor are definitively ruled out today. The upcoming report on EU economic and consumer sentiment is expected to paint a similarly gloomy picture. Given the omnipresent threat of war and rising living costs, the outlook of market participants is massively dampened.
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