The German stock market opened strongly Wednesday, with the DAX index registering significant gains fueled by renewed optimism surrounding the protracted US government shutdown. Shortly after 9:30 AM, the benchmark index reached approximately 24,321 points, a rise of 1.0% above Tuesday’s closing level. Brenntag, RWE and Commerzbank led the upward trend, while Eon, Zalando and Scout 24 lagged.
The market’s positive momentum is largely attributed to hopes that the US political deadlock will soon be resolved. Thomas Altmann of QC Partners suggested this may be the day that brings an end to the longest shutdown in US history. He anticipates that a resolution will unlock a backlog of crucial economic data, currently unavailable due to the government’s operational limitations. “This would mark the end of a period of uncertainty for investors and central bankers alike” Altmann noted, implying a renewed clarity for economic forecasting and policy decisions.
The DAX’s recent rally has allowed it to regain distance from its 200-day moving average, currently positioned at 23,393 points. The index had previously approached this level closely on Friday. This key technical indicator last breached in April during the period of trade turbulence, highlighting its significance as a potential barometer of investor sentiment. A sustained dip below the 200-day average is viewed by many as a bearish signal, potentially triggering selling pressure from technically driven investors and algorithmic trading models. This raises questions about the long-term stability of the current upward trend, particularly given underlying geopolitical risks.
The Euro weakened slightly against the US dollar, trading at $1.1584, reflecting a continued pressure on the single currency amidst ongoing economic concerns. The price of Brent crude oil also fell, dipping to $64.85 a barrel, a decrease of 0.5% from the previous day’s close. This decline adds another layer of complexity to the macroeconomic picture, potentially dampening enthusiasm despite the positive DAX performance.