Stagflation Shock: A Torn Fed Pushes the DAX Below 24,000 Points!
Investors' tense wait-and-see approach has taken a bitter toll: In the wake of a highly divided Fed interest rate decision, the German leading index came crashing down below the psychological bastion of 24,000 points. While Wall Street digested the news relatively moderately and closed only slightly in the red, the anticipated downward momentum took hold in the DAX. At the official Xetra close, a minus of 0.27% at 23,954.56 points flashed on the pricing board. But the worst was yet to come in after-hours trading: a rapid slide southwards will in all likelihood force the index into a painful opening with a significant downward price gap this Thursday.
Is the Worst-Case Scenario Looming? Fed Hawks Rebel, ECB in Focus!
The absolute word of terror now hovering over the trading floor like a sword of Damocles is "stagflation." U.S. central bankers fear a toxic mix of exploding gasoline prices, collapsing consumption, and stubbornly entrenched inflation. Just how deep the trenches within the Fed have become is demonstrated by an unprecedented event: no fewer than three Fed hawks strictly rejected the current wording of the future strategy! With this monetary policy tremor in the background, the focus now ruthlessly turns to the ECB. Anyone hoping for hints of a summer interest rate cut today is likely to be bitterly disappointed. Given the raging energy crisis, Christine Lagarde's hands are effectively tied—and this despite the fact that the European economy is weakening much more massively than that of the U.S. No interest rate change is expected today, which is why every single word at the press conference will be mercilessly scrutinized.
Technical Knockout at Month-End? Crash Danger Down to 23,400 Points!
From a technical perspective, the current picture resembles a severe setback. The DAX is massively battered, and the hope that the ECB of all things will miraculously turn the market around today is vanishingly small. With this fierce downturn, the leading index has immediately neutralized its still-fresh upward trend and is now gazing dangerously into the abyss. A solid technical support zone cannot be identified again until the 23,400-point area. On today's final trading day of the month, investors are thus threatened with a highly nervous and restless spectacle, in which the hoped-for positive monthly close for April suddenly falls into acute danger!
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