The DAX remains within striking distance of the symbolic 24,000-point threshold, but investor enthusiasm appears to have cooled. German markets opened the midweek session with modest gains, yet the strong bullish momentum seen in previous weeks has clearly lost steam.
In early trading, the DAX edged up by 0.2%, reaching 23,677 points. However, the optimism that had followed the recent trade agreement between the United States and China has faded. Many investors are holding back from making significant moves, opting instead to wait for fresh signals that could justify further buying.
From a technical perspective, there are growing signs of caution. Christian Zoller, a chart analyst at ING, highlighted that the DAX remains in overbought territory following its steep climb from a low of 18,807 points in early April. This sharp rise occurred without any meaningful correction, raising concerns about the sustainability of the rally.
False Breakout Concerns Weigh on Market Confidence
At the beginning of the week, the DAX set a new record high at just under 23,912 points. However, it was unable to maintain that level, falling by around 600 points shortly thereafter before stabilising. The lack of follow-up buying has now cast doubt over the strength of the upward movement.
This hesitation may indicate a classic “bull trap” — a false breakout that lures investors before reversing sharply. For now, the DAX continues to trade above its previous all-time high from mid-March, which stood at 23,475 points. Market watchers are closely monitoring this level. A drop below it would confirm the recent high as a failed breakout and raise the likelihood of a broader pullback.
At the latest check, the DAX was down 0.51%, standing at 23,518.04 points, marking a daily loss of 120.52 points.
Tech Stocks Shine on Wall Street Following Inflation Dip
Across the Atlantic, Wall Street saw gains in the technology sector after an unexpected drop in US inflation figures. This easing of inflationary pressures bolstered hopes that interest rate hikes may be paused, encouraging a move into growth stocks.
Despite the tech rally, the Dow Jones Industrial Average ended the day with a slight decline of 0.6%, closing at 42,140 points. In contrast, the S&P 500 climbed by 0.7% to finish at 5,886 points. The Nasdaq, which is heavily weighted with technology shares, jumped 1.6% to reach 19,010 points.
Most recently, the Dow was at 42,110.70 points, down 43.85 points or 0.10%.
While the tech-led optimism in the US offers some global support, the German market seems to be awaiting stronger domestic catalysts before making a decisive move higher. For now, all eyes remain fixed on the 24,000-point barrier — a level that symbolises both opportunity and potential risk.