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Morning Brief: DAX Index, Nikkei 225 Slides as FTSE 100 and DXY Bounces Back

Asian stocks declined as investors reacted to the new tensions between the US and China. In China, the Shanghai composite declined by 0.65% led by a sharp decline in SMIC, the biggest contract chipmaker in the country. That is after the US threatened to blacklist the firm because of privacy issues. Other Chinese firms that the US has blacklisted are Huawei, KTK Group, and Hefei. Meanwhile, in Japan, the Nikkei 225 index dropped, led by a sharp decline in Softbank share price. Elsewhere, the ASX 200 and KOSPI are up by 0.35% and 0.70%, respectively.

In Europe, stocks are set to rise as investors remain confident that European companies will weather the ongoing weakness. Investors are also looking ahead to the European Central Bank (ECB), which will deliver its rate decision on Thursday. Futures tied to the FTSE 100 are up by 0.15% while those tied to the CAC 40 and FTSE MIB are up by 0.33% and 0.65%, respectively. On the other hand, those tied to the DAX index and Stoxx 50 are down by 0.40% and 0.58%. The mixed performance comes a week after European and American stocks notched their biggest weekly decline in almost three months.

In the United States, stocks will not trade today as the country celebrates Labour day. Still, futures tied to the Dow Jones, S&P 500, and Nasdaq 100 are down by 0.27%, 0.62%, and 1.33%, respectively. Meanwhile, the US dollar index (DXY) is extending the gains made last week. The index is up by 0.28% because of the dollar’s strength against key currencies like the euro, sterling, and Swedish krona. It is trading at $92.98. Separately, Brent and West Texas Intermediate (WTI) crude oil have dropped by 1.50% and 1.80%, respectively while gold and silver prices are up marginally.

DAX index futures technical outlook

The daily chart shows that DAX index futures are in their third consecutive day in the red. They are trading at €12,900, which is significantly lower than last week’s high of €13,445. The price is above the ascending trendline that is shown in blue. It is also above the 50-day and 100-day exponential moving averages. Most importantly, the DAX index has formed an ascending triangle pattern.

Therefore, since this triangle is not nearing a confluence level, I suspect that the index will continue consolidating within this level. However, a break below the ascending line will send a signal that bears have prevailed, which will push the price lower.

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DAX Index technical chart

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