rises as investors await trade news from Trump. shows resilience despite a rise in inventories and uncertainty over trade tariffs.
The DAX, along with European indices, is inching higher on Wednesday, supported by defence stocks as investors wait for news on a trade deal with the US.
President Trump said he will probably inform the EU within the next few days what rate it can expect for exports, adding that talks with the EU had been going well.
The FT reported that EU negotiators are nearing a trade deal with the US. The market seems less concerned about trade tariffs, amid hopes that Trump will remain flexible and open to negotiation. As a result, the DAX is trading near record highs.
Yesterday, Trump announced plans to impose a 50% tariff on imported and warned of levies on semiconductors and pharmaceuticals, which would come soon. He also informed 14 countries of the new tariff levels, which take effect on August 1. However, he added that there was still time to negotiate. Today, Trump is expected to announce levies for seven more countries.
The eurozone economic calendar is quiet. Attention will be focused on ECB speakers, including Chief Economist Philip Lane, and will shift to the US session, where the will be released.
At the sector level, defence stocks have been outperforming and have traded firmly in recent months, driven by pledges from governments to increase defence spending. Banks are also performing well ahead of the start of earnings next week.
DAX Forecast – Technical Analysis
DAX is extending its recovery from 23k, rising above 24k resistance to current levels of 24,350. Buyers supported by the RSI above 50 will look to extend gains towards 24,500. Above here, there are blue skies so 25k would be the next logical target.
Support can be seen at 24k and 23,700, the confluence of the 20 and 50 SMA. A break below 23k would create a lower low.
Oil Shows Resilience Despite a Jump in Inventories
Oil prices are holding steady on Wednesday, hovering around a 2 two-week high reached in the previous session. Some markets await clarity on US tariffs, and after rising crude inventories in the US.
Figures from the API showed that US inventories gained 7.1 million barrels in the week ending July 4th, despite estimating a 2.8 million barrel draw. Typically, this would have a bearish impact on the price, especially when OPEC+ is also increasing output.
In the meeting on Saturday, the OPEC+ group agreed to increase output by a larger-than-expected 548,000 barrels per day (bpd), up from the 411,000 bpd increase over the previous months. Again, we would usually expect this news to have a bearish impact on the price; yet, oil trades around a two-week high.
The oil market is showing considerable resilience following this announcement. Instead, the market is focusing on the demand side of the equation.
Chinese inflation data turned positive in June for the first time since January, although remains in deflationary territory. rose 0.1% YoY, ahead of expectations.. China is the world’s largest importer of oil.
Furthermore, it’s peak driving season in the US, which could help support demand. There are also signs in the market that investors are less worried about the impact of Trump’s trade tariffs, on expectations that he is open to negotiation. US stocks continue to hover around record highs, and the is recovering from its 3.5-year low, trading at a 2-week high against its major peers.
If investors are less concerned about trade tariffs, this is encouraging for the growth outlook and, therefore, oil demand.
US EIA inventory data is due later today. A strong gain in inventories could pull oil lower.
Oil Forecast – Technical Analysis
Oil trades in a longer-term downward channel. However, the price recovered from the 55.30 May low and trades above its short-term rising trendline. The price is testing the 200 SMA resistance at 68.50.
Buyers, supported by momentum, will look to extend gains towards 70.00 round number and 72.30.
Failure to rise above the 200 SMA could see sellers look to test support at 65, the rising trendline support, and also the mid-point of the falling channel. Below here, 60.00 comes into play.
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