DAX remains above 26,000 points while oil prices and global interest rate expectations weigh on the markets

There is likely to be little change in the DAX for the time being. The broker IG valued the German leading index 0.1 percent higher at 26,029 points the morning before the start of Xetra trading. This means it remains above the round mark of 26,000 points - a long way from the most recent record of 26,618 points.

Yesterday too, the DAX was able to stay above the 26,000 point mark: at the close of trading, the leading German index was 0.15 percent lower at 26,006 points. At times it was already trading well below the round mark.

The fact that Germany's mechanical and plant manufacturers are increasingly shifting their research activities abroad is likely to cause discussion today. 43 percent already organize research and development outside of Germany, according to a survey by the industry association VDMA among 400 member companies.

The majority of these companies want to significantly expand their foreign share in the next few years. This development is "a clear alarm signal for Germany as an industrial location - also because with 190,000 engineers we are the most important value creation partner for new products and processes in the economy," says VDMA deputy general manager Hartmut Rauen.

Oil prices continue to have a firm grip on the stock markets: on the raw materials market, Brent crude oil from the North Sea was barely firmer at $97.10 per barrel, while US WTI oil rose by 1.1 percent to $92.51 in the morning. “The US holiday Labor Day led to lower trading volumes at the start of the week,” said analysts at Bank Westpac. "However, the military exchange between the US and Iran over the weekend further boosted oil prices and dampened overall risk appetite."

In addition, new attacks by the pro-Iranian Houthi militia in Saudi Arabia are also weighing on the situation. The attacks hit, among other things, the Abha international airport in southern Saudi Arabia and facilities of the state oil company Aramco in Abha and Jizan, it said in a Telegram post. The refinery in Jizan belongs to the Saudi Arabian oil company Saudi Aramco, one of the most valuable companies in the world.

“The rising oil prices are putting a particular strain on German industrial companies and are having a negative impact on the consumer behavior of people in Europe,” said Andreas Lipkow, analyst at CMC Markets. The longer energy prices remain high, the greater the risk, the analysts at Bantleon stated. The US investment bank Goldman Sachs made a similar statement in its oil price forecast, which it raised due to the ongoing risks for shipping in the Middle East. Analysts believe that up to $120 per barrel is possible in 2027 if the situation in the Middle East does not improve.

This means that fears of inflation and interest rates remain omnipresent. The financial markets have already prepared for the fact that the European Central Bank (ECB) will increase the deposit rate, which is important for controlling the monetary policy course, by a quarter point to 2.50 percent on Thursday.

It is unclear whether the US Federal Reserve will follow suit in the fight against high inflation. Since the surprisingly strong US labor market report last Friday, traders have been pricing in a probability of around 57 percent for the US Federal Reserve to raise interest rates in September.

And in Japan, too, strong wage growth and an improving economy are fueling speculation about faster interest rate increases. According to official data, Japanese real wages rose 2.4 percent in July, the most since May 2021. In addition, the economy grew faster in the second quarter than initially expected thanks to higher corporate investment. It is now considered almost certain on the markets that the Bank of Japan will raise its key interest rate to 1.25 percent next week.

This drove the yen to its highest level since mid-February on Tuesday, while the Asian stock markets as a whole were unable to find a clear direction, especially since there was also a lack of guidance from Wall Street due to the local holiday. "As wage growth continues to gain momentum, there is a growing case for the Bank of Japan to increase the pace of monetary tightening," said analysts at Capital Economics. Against this background, the Japanese stock market hardly moved; in Tokyo, the Nikkei index, which includes 225 stocks, remained almost unchanged at 66,445 points.

The fluctuations on the Chinese stock markets were also limited. The Shanghai Stock Exchange gained 0.4 percent to 3,947 positions. The index of major companies in Shanghai and Shenzhen rose 0.2 percent to 4,582 points. The market in South Korea, on the other hand, recorded clearer gains: Driven by price gains in chip stocks, the leading Kospi index rose by 1.9 percent to 7,129 points, reaching its highest level in three weeks.