The German DAX began the trading day on Thursday morning with positive momentum. By 9:30 AM, the leading index was calculated at around 24,990 points, representing a gain of 0.3% compared to the previous day’s closing level.
According to Jochen Stanzl, Chief Market Analyst at Consorsbank, DAX investors were seemingly waiting for concrete signs regarding an end to the Middle East conflict. “Now that these signs are materializing, we are seeing strong buying” Stanzl stated. He added that the reporting season has demonstrated the resilience of companies despite high energy prices, suggesting a strong likelihood of a breakthrough from the DAX’s year-long sideways period.
Stanzl also noted the flow of capital, observing a growing demand for Eurozone government bonds since the beginning of the year, while demand for US Treasuries has remained stagnant. This trend is viewed as a favorable sign, indicating sustained and high interest from international investors in Euro-based assets. He suggested that the rotation of capital from US stocks to European stocks may have only been paused-rather than permanently interrupted-by the Middle East conflict.
While US and some Asian indices are trading higher due to AI-driven companies, Stanzl believes the cyclical nature of the DAX could soon take full effect if the Middle East conflict is resolved and oil and gas prices decline. He concluded that the index’s recent movements suggest investors are preparing to target an all-time high.
Overall, Stanzl believes that global equity markets are driven by two main forces: investments in defense and investments in Artificial Intelligence. Should the Middle East conflict resolve soon, preventing ongoing instability, both these engines can return to full capacity, painting a positive outlook for stocks.
In currency news, the European common currency strengthened slightly on Thursday morning, with the Euro trading at $1.1766 per US dollar. Meanwhile, the gold price saw a significant profit, reaching $4,743 per troy ounce by morning, equivalent to 129.60 euros per gram, marking a 1.1% increase.
Energy prices fell sharply. A barrel of Brent crude oil cost around $98.33 on Thursday morning, representing a steep decrease of 10.5% compared to the previous day’s close.