The DAX closed with a slight gain of 0.45 percent, reaching 24,423.07 points, but it gave back all of its gains in after-hours trading. Investors seem to regard the recent diplomatic summits to end the Ukraine war as mere lip service. While official rhetoric speaks of a "historic opportunity," the fighting continues. This disconnect between political statements and the reality on the ground is causing market participants to remain in a wait-and-see mode and not price in positive developments.
Fading Optimism: Is the Market Showing Signs of Exhaustion?
Adding to this, optimism for a US interest rate cut is fading. The widely watched Fed Watch Tool shows that the probability of a rate cut, which was recently over 90 percent, has now dropped to around 85 percent. This is reflected directly in the US markets: the NASDAQ fell 1.5 percent and the S&P 500 lost 0.6 percent, while the Dow Jones remained nearly flat. The defensive posture of investors is unmistakable.
Although the DAX is still fundamentally positive, these could be the first signs of a market-wide cooldown. The proverbial catalyst needed to spur further buying seems to be missing. After a party, a hangover is never far away.
Recapturing 24,300 Points Is Key to the DAX's Future
To restore optimism and generate further buying, the DAX must quickly reclaim the 24,300-point mark. A sustained move above this level would be a strong signal to lure investors back in and continue the hunt for a new all-time high.
Can the DAX overcome the current challenges, or does a relapse into a correction loom?
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