The DAX, in conjunction with its European counterparts, is experiencing further declines on Thursday as oil prices surge once more, heightening apprehensions regarding a possible supply shock and escalating inflationary pressures in the context of the ongoing conflict in the Middle East. Crude oil surged past $100 a barrel following attacks on fuel tankers in the Persian Gulf, amidst an ongoing conflict between Iran and US-Israeli forces that shows no signs of resolution. Europe, with its significant dependence on oil imports, may experience a rise in inflation if crude prices stay high for a prolonged duration, further straining an already sluggish regional growth.
Before the onset of the Iran conflict, expectations were that the ECB would maintain its interest rates at their current levels for the year. Currently, money markets are reflecting an expectation of an ECB rate hike by July, with an 85% likelihood of an additional increase by December. Banks that are sensitive to economic fluctuations are driving the sector downward, whereas persistent geopolitical issues are bolstering defense stocks. BMW has experienced a decline of 2.3% following the carmaker’s forecast indicating a moderate decrease in pretax earnings for the year, alongside stagnation in deliveries.
No significant data from the eurozone or Germany is scheduled for release today. The US economic calendar appears subdued, suggesting that developments related to the Middle East conflict will probably serve as the primary catalyst for market movements. After encountering resistance at 25,400, the DAX experienced a downward rebound, breaching its 50 and 200 SMA as well as its multi-month rising trendline, ultimately declining to a low of 22,700. The breach of these critical supports, along with the RSI positioned below 50, sustains sellers’ optimism for additional downturns.
Immediate support stands at 23,400. A decline past this point paves the way to 22,900, the low recorded in November, and subsequently to 22,700, the low anticipated for 2026. A decline beneath this level establishes a lower low. For a more stable footing, buyers would need to surpass 24,000, with a further target at 24,200 to align with the 200 SMA.