Record Closing Price for the DAX: Benchmark Index Misses All-Time High by a Hair's Breadth!
The German benchmark index ended a successful trading week with a solid gain of 0.5 percent, securing a new record closing price at 26,440 points. Although the DAX missed a new absolute all-time high by just a hair's breadth, the bulls continue to demonstrate remarkable resilience. Particularly striking is the current fundamental decoupling: This sustained price rally by no means results from a flourishing domestic economy, but is driven almost exclusively by global, company-specific factors as well as hopes for a pause in central bank interest rate hikes.
Tech Sector in Takeover Fever: SAP Fuels the Rally as the Index Workhorse!
Once again, shares of SAP proved to be the undisputed workhorse on the Frankfurt trading floor. The software giant recorded another strong price increase of 2.7 percent on Friday, almost single-handedly keeping the broader market's rally alive. The excellent sentiment in the technology sector was fueled by massive takeover rumors: Speculation about financial investor Silver Lake's potential entry into Workday sparked downright industry euphoria, from which the Walldorf-based company disproportionately benefited as a European heavyweight. This optimism is flanked by a lack of inflation concerns. Since no new inflation dynamics are emerging, investors are increasingly pricing in that central banks will refrain from further interest rate hikes in September.
Thinned-Out Calendar: Will Technical Overextension Bring the DAX to Its Knees?
For the newly begun trading week, investors are facing a primarily technically driven market. Given an extremely thin macroeconomic calendar, technical chart levels are likely to dictate trading activity. Analytical caution is advised here: A massive price gain of nearly 8 percent within 14 trading days signals a technical overextension that would absolutely justify an imminent consolidation. However, since the index has recently digested this rapid upward movement at an extremely high level without panicked profit-taking, the foundation remains intact. At the start of the week, it will now have to be seen whether overnight economic data from China (retail sales and industrial production) can provide fresh momentum, or whether the DAX will slide into a lackluster sideways phase following the recent "tiptoe-into-the-weekend" dynamic.
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