DAX, Oil Forecast: Two Trades to Watch

Graphic of trading data chart
Fiona Cincotta
By :  ,  Senior Market Analyst

DAX rises after Nvidia boosts the market mood

  • Nvidia smashed forecasts and guided for a 170% rise in Q3 revenue
  • PMI data disappointed by ECB peak rates could be near
  • DAX tests 20 sma resistance

The DAX is pushing higher for a fourth consecutive session as we return to the bad news is good news scenario and as Nvidia’s results inject optimism into the broader market.

Blockbuster earnings from Wall Street’s darling, the AI chip maker Nvidia, boosted US futures and Asian equities before transferring to Europe.

The stock posted revenue and earnings well ahead of expectations, forecast Q3 revenue to rise 170% YoY, and announced a bumper $25 billion buyback programme.

The eurozone economic calendar is empty today, so Nvidia news will likely keep stocks buoyant.

Yesterday, PMI data came in much worse than expected, raising concerns over the health of the economy. The eurozone composite PMI fell to 47, down from 48.6. The services PMI fell below 50 for the first time this year, and Germany’s business activity dropped to its lowest level in 3 years, raising concerns of a prolonged economic slowdown.

The data has fueled bets that the ECB is close to peak rates, sending stocks higher.

Looking ahead to the US session, US durable goods and jobless claims data is awaited. The Fed’s Jackson Hole Symposium begins today with several Fed officials due to speak.

DAX forecast – technical analysis

DAX rebounded off support at 15466 and has extended gains for a fourth day. The price is testing resistance at 15900 the 20 sma. A rise above here and 16050, the August 10 high, brings 16335, the May high, into play ahead of 16500.

On the flip side, should sellers successfully defend the 20 sma, the price could fall back to test the August low at 15465 and the 200 sma at 15420. A break below here brings 15000 into focus.

dax forecast chart

Oil falls on weak US data & as the Jackson Hole forum begins

  • Nerves show ahead of the Fed’s Jackson Hole Symposium
  • Weak US PMI data overshadows large stockpile draw
  • Oil sellers need to break below 77.60

Oil is extending losses for a fourth straight session, putting losses so far this week at over 3% despite an improved market mood today. Instead, disappointing data and nerves that the Federal Reserve could reinforce a hawkish stance are weighing on oil.

Today, the Jackson Hole economic symposium, hosted by the Federal Reserve, kicks off in Kansas City, with several Fed officials due to speak.

Historically, the Jackson Hole Symposium has been used as a platform by Fed leaders to get a clear message about the outlook for monetary policy.

Federal Reserve Chair Jerome Powell will speak tomorrow.

On the data front, US Composite PMI came in below forecasts at 50.4, down from 52, suggesting that the US economy is stalling. While stocks rallied on hopes that this could mean the Fed is near peak rates, oil fell on worries over the demand outlook.

Meanwhile, EIA stockpile data showed a drop of 6.13 million barrels in inventories for the week ending August 18, significantly more than the -2.85 million forecast.

Oil forecast – technical analysis

WTI crude oil price ran into resistance at 84.60 and rebounded lower, breaking below the 20 sma, before hitting a low of 77.60 yesterday. Selle5rs need to break below this level to extend the selloff towards the 200 sma at 76.00.

On the upside, buyers could look for a rise above the 20 sma at 81.14 and 81.73, the August 21 high, to bring 83.50, the April high, back into focus.



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