DAX rises amid an upbeat mood
- US NFP data supports view Fed could pause rate hikes
- German trade surplus shrinks
- DAX needs to rise above 16000 to extend its rebound
The DAX, along with its European peers is set to start the week on the front foot after gains in Asia and as the market continues digesting Friday’s Goldilocks non-farm payroll report.
The US jobs report showed robust job growth along with a rise in unemployment which supported stocks. The data points to the Fed keeping interest rates on hold at the coming meeting and potentially achieving the elusive “soft landing scenario”.
Meanwhile, in Asia news that China’s struggling Chinese property developer Country Garden reached a deal with creditors is also boosting the market mood, driving risk on trade.
On the data front, the German trade surplus narrowed by more than expected to €15.9 billion down from €18.7 billion.
The data comes after German manufacturing PMIs on Friday painted a grim outlook for the German economy.
Looking ahead, ECB President Christine Lagarde and chief economist Philip Lane are both due to speak and could shed some light on the outlook for the economy and future rate hikes. A less hawkish-sounding Lagarde could help lift the DAX.
DAX forecast – technical forecast
DAX rebounded from 15465 crossing above the 20 sma but stalled after failing to push meaningfully above 16000. This is the level that buyers will look to rise above in order to extend the rebound towards 16200 the May high ahead of 16530 and fresh all-time highs.
On the flip side, 15700 offers support, with a break below here opening the door to 15466.
Oil steadies after strong gains
- Oil rose 7% last week on supply concerns
- US labour day trading could be muted
- WTI needs to rise above $86.00 to extend the rebound
Oil prices are holding steady after rallying over 7% last week reaching a level that was last seen in November last year.
Supply concerns were a principle driver in the rise in oil prices as Saudi Arabia is expected to extend its 1 million barrel per day production cut into October, which comes in addition to the broader OPEC+ agreed output cut.
Meanwhile US inventory data from the EIA shades that US crude oi stockpiles fell by more than expected, dropping 10.8 million barrels.
Better than expected Chinese manufacturing PMI data, plus more stimulus measures from Beijing also underpinned the demand outlook.
Friday's nonfarm payroll has been seen and safe public clear for bold as more jobs were added in expected but wage growth cooled and unemployment rose. The report is supportive of the view that the Federal Reserve could pause it's rate hiking cycle, which could benefit the oil demand outlook.
Today the US is on its Labour Day bank holiday so trading could be muted.
Oil forecast – technical analysis
After a steep runup last week WTI is easing back from last week’s high of 86.09. The RSI supports further upside while it remains out of overbought territory.
Buyers will look to rise above 86.09 to bring 89.40 the November 14 high into focus ahead of 93.20 the November high.
Support can be seen at 84.60 the August high, with a break below here opening the door to 83.50 the April high before exposing the 20 sma at 81.60.