DAX Trades Higher on Debt Ceiling Relief

The DAX broke out to its highest level since January 2022 yesterday as optimism over an expected US debt ceiling deal helped drive bullish sentiment in stocks. Encouraging comments from Speaker of the House Kevin McCarthy yesterday regarding the likelihood of a deal in principle being agreed ahead of the weekend saw risk sentiment swelling over the day. Stocks across the board were driven higher with European stocks benefiting nicely too from the ongoing positivity in corporate earnings and better European data.

German PPI Falls 

German producer price inflation was seen falling to its lowest level in two-years yesterday in an encouraging sign that inflation will continue to fall in the eurozone. Final eurozone CPI was left unchanged at 7% and 5.6% for headline and core respectively. While still above the ECB’s target, CPI has been cooling steadily which is helping keep European stocks supported for now. Today, focus will be on ECB’s Guindos and Lagarde who are both set to speak alongside the release of the latest ECB economic bulletin.

Technical Views

DAX

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 The rally in the DAX has seen the market extending gains above the 15642.76 level with the all-time highs around 16278.35 now very close. With momentum studies bullish, the focus is on a break of the level and a continuation higher near-term. To the downside,  the bull channel lows are the main support area to watch along with 15642.76.

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