- Crude oil prices form a clear trend after OPEC confirmed a 2 million barrel cut.
- The cryptocurrency market has managed to maintain a steady market capitalization for consecutive weeks.
- Despite strong price climbs, the DAX remains under pressure.
The US Dollar strengthened against its main competitors after gaining support from positive economic figures. The US Dollar Index is slightly lower this morning but still remains higher than the price ranges seen on Tuesday and yesterday morning. Traders hope for a clearer forecast after tomorrow’s NFP and next week’s inflation figures.
Crude oil, on the other hand, has illustrated a clear direction regarding both technical analysis and macro factors. The oil price saw a strong increase after OPEC+ defied the West, mainly Washington, by agreeing on a production cut of 2 million barrels per day.
This sounds like an extremely high figure. However, investors should note that OPEC has not been able to meet production targets over the past three months. Therefore, the actual reduction will most likely be in the region of 880,000 to 950,000 barrels.
Furthermore, the stock market began the day with a considerable retracement but regained momentum after the US trading session opened. The S&P 500 reached a new monthly high, but analysts are still concerned about inflation remaining high and another potential jumbo rate hike.
The technology sector supported the US stock market. Microsoft (NASDAQ:MSFT) added 5.28% in value in just a week, Alphabet (NASDAQ:GOOGL) gained 4.40%, and Amazon (NASDAQ:AMZN) increased by 5.84%. The market sentiment also rose slightly after Elon Musk confirmed his willingness to proceed with the purchase of Twitter for $44 billion.
Lastly, cryptocurrencies continue to react to the weaker Dollar and rise in the market’s higher risk profile. Bitcoin has increased by 4.77% and has managed to maintain a price above $20,000 without any significant declines.
According to the latest reports, the total market capitalization has remained stable at $945 million. Whereas August and early September saw the market capitalization decline consecutively.
DAX - Technical View
The DAX managed to open on a bullish price gap for the second time this week and has renewed its price highs. This is a similar price movement to that seen in the US. However, the DAX shows a sizable decline this morning on smaller timeframes.
The price is still above average price movements, and MAs are still crossed upwards. Still, traders will monitor the movement, remaining cautious of the risk of a European recession which is a stronger reality than across the Atlantic.
German business activity figures were a big concern for investors. Yesterday, the final services PMI declined from 49.8 to 48.8 for the Eurozone, and the German services PMI declined from 47.7 to 45.0 points.
Stock traders are also concerned about {inflation in Germany, which is at 10%. German inflation has overtaken other smaller EU nations, which are more accustomed to high inflation. In addition, the ECB is predicted to increase interest rates above the “neutral level” again, which can further pressure the German economy and the stock market.
On the other hand, the German government has recently confirmed and announced a major fiscal stimulus package to support businesses and consumers. Some analysts have advised that this may assist the DAX in avoiding further significant declines below 10,000.
Today, traders will be monitoring the ECB's account of Monetary Policy Meeting scheduled to be released this afternoon. Investors will be looking for indications regarding the size of the next interest rate hike.