Global Markets React to Jobs Data DAX Retraces Gains

Market Overview

USA

Over the weekend, global financial markets experienced notable movements influenced by economic data releases and geopolitical developments. In the United States, stronger-than-expected employment figures have reignited inflation concerns. The U.S. economy added more jobs than anticipated on Friday, suggesting a robust labor market. This development has led to speculation that the Federal Reserve may reconsider its monetary policy stance, potentially delaying anticipated rate cuts. Consequently, major U.S. indices, including the S&P 500 and Nasdaq, experienced declines of approximately 1.5% on Friday, while Gold gained 0.80%.

AUSTRALIA

In Australia, the ASX200 index fell by 1.23% on Monday, closing at 8,191.90 points. This decline was largely attributed to the ripple effects of the U.S. employment data, which heightened concerns about global interest rate policies. The Australian dollar also weakened, reaching a near five-year low at 61.30 US cents. Sectors such as financials and retail faced significant pressures, while energy and utilities saw gains, with companies like Woodside Energy and Santos posting notable increases.

CHINA

Asian markets mirrored this cautious sentiment. In China, recent data indicated that corporate profits are set to decline for the third consecutive year, with a 4.7% year-on-year decrease. Persistent deflationary pressures, especially in producer prices.

Despite this, Chinas latest data release released in the early morning hours show an increase in exports with a 10.7% increase, trumping the previous rate of 6.7%, however despite the strong export performance, weak domestic demand, exacerbated by a prolonged property slump, continues to hinder economic growth.

UK

 In the UK, the bond market has experienced turmoil, with gilt yields reaching their highest levels in 27 years. This surge in borrowing costs has raised concerns about potential slowdowns in economic growth and investment. However, some experts believe that the devaluation of the pound could attract foreign investments, potentially leading to a boom in mergers and acquisitions, particularly from U.S. companies seeking to acquire cheaper UK assets.

Corporate news

AI Chips

With the CEO of Nvidia predicting the use of quantum computing still years away quantum stocks plummet.  Following Nvidia Corp. CEO Jensen Huang's statement that "very useful" quantum computers are probably decades away, shares of IonQ Inc., Rigetti and other businesses associated with quantum computing fell from their all time highs.

Boeing

Boeing is under scrutiny as industry specialists suggest that a breakup of the company could enhance shareholder value. Drawing parallels to General Electric's recent successful restructuring, analysts propose that separating Boeing into its primary divisions—commercial aerospace, defense, and services—could unlock significant value. Despite recent leadership changes and strategic shifts, a formal breakup is still a rumour.

EU AUTO Manufacturers under pressure

Most EU car manufactures are battling with decreases in sales of vehicles, including Porsche, Mercedes, BMW and VW. As increased production costs, and weak demand from its biggest market, China is especially worrisome.

META

Meta's CEO, Mark Zuckerberg, has sparked discussions by criticizing the impact of diversity, equity, and inclusion (DEI) programs on corporate culture. He argues that such initiatives have led to a "culturally neutered" environment and emphasizes the benefits of "masculine energy" in business dynamics. These comments coincide with Meta's recent decisions to end certain DEI programs and adjust company policies, reflecting a broader shift in corporate America's approach to diversity and inclusion.

Bitcoin

Bitcoin falls for 3^rd straight day to 94$k on fed rate jitters, many altcoins follow suit as uncertainty is on the agenda..

Economic Calendar Highlights

The economic calendar is rather quiet today with no major releases. However tomorrow we will be gifted with the US PPI. On Wednesday the UK CPI will be released, followed by the US CPI later that day and then the Crude oil inventories towards the afternoon.

Then Thursday will give us the UK GDP numbers, German CPI, US Core retail sales and the Philadelphia Fed Manufacturing Index. We finish off the week with Fridays release of the EU CPI.

Developments in Germany

Germany is a complex crossroad currently. Fears of Trump imposing Tariffs on the EU is making the rounds currently, with the EU deciding on next steps, should the tariffs be imposed. Also, the coalition government has been dissolved and no clear leader is yet voted. Even the German industrial sector, a cornerstone of its economy, is under pressure as weak domestic and international demand is pressuring sales, especially in the automotive sector. Additionally, strict energy policy moves remain a focal point, with ongoing discussions about sustainable energy transitions and the implications of geopolitical tensions on energy supply.

Germany 40 (DAX) 1 Day chart - Technical Analysis

1. Price Levels and Fibonacci Retracements:
• The price has recently pulled back from its swing high at 20,525.3.
• Fibonacci levels are clearly marked:
• 0.618 retracement at 19,870.1: This is a critical support zone, often considered a strong level for a potential bounce.
• 0.5 retracement at 19,667.7: Another important support level, aligning with the 50% mean-reversion level.
• 0.382 retracement at 19,465.2: Lower support level, indicating a potential further retracement.
2. Moving Averages:
• 200 EMA (red line): At 18,845.5, this is a long-term support level and indicates the bullish trend is intact as long as price remains above it.
• 100 SMA (orange line) and 50 EMA (green line) are converging around the 19,800 range, forming a dynamic support cluster. This adds strength to the Fibonacci support around 19,870.1.
3. Indicators:
• RSI (14): Currently at 51.78, indicating neutral momentum. There is room for further downside without entering oversold territory.
• Stochastic RSI: The blue and orange lines are heading lower after being in overbought conditions. This suggests weakening bullish momentum and a likelihood of consolidation or further retracement in the short term.
4. Price Action:
• The current candle shows a bearish pullback, reflecting rejection near the highs.
• There is a potential for the price to test the 19,870.1 (0.618 Fib) level in the coming sessions.
5. Key Levels:
• Support:
• Immediate: 19,870.1 (0.618 Fib).
• Further: 19,667.7 (0.5 Fib) and 19,465.2 (0.382 Fib).
• Major: 18,845.5 (200 EMA).
• Resistance:
• 20,158.2 (0.786 Fib): Immediate resistance.
• 20,525.3: Swing high and key level for bulls to overcome.

Summary:

The DAX is currently undergoing a retracement after reaching recent highs. The support at the 0.618 Fibonacci level (19,870.1) will be crucial in determining whether the bullish trend continues or the retracement deepens. Momentum indicators suggest a cooling phase, which could lead to consolidation or further downside in the short term.

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