Investors have paused their recent record-breaking momentum but have not shown signs of panic, according to Martin Utschneider, a market analyst at Robomarkets. He described the trading day as 'constructive' despite the absence of strong upward movement, adding that prices may continue their consolidation phase at current high levels for now. No significant selling pressure has been observed, and the trend remains firmly in an upward direction, as long as no major shocks disrupt the stability.
Energy markets show cracks
Brent crude oil prices for September delivery rose by 1.2% to about $83 per barrel, following a 3.8% increase the previous evening. However, the weekly performance tells a different story, as the price fell by 7.5% over the past seven days. The oil price remains well below the $102 peak reached two weeks ago, a drop that has sparked some optimism among analysts. Jochen Stanzl from Consorsbank suggested the current price level at $80 rather than $100 could offer some relief in terms of inflation risks. The decline, though still steep, may prevent further pressure on consumer prices and reduce the urgency for monetary tightening.
Iran talks and labor data weigh
U.S. President Donald Trump claimed the Iran war could end 'fairly soon' and that an agreement regarding the Strait of Hormuz 'might be imminent.' However, Iran reportedly made progress with Oman on shipping access without U.S. involvement. Thomas Altmann, a portfolio manager at QC Markets, observed that the prolonged wait for a deal is causing 'increasing impatience' among investors. The uncertainty is reflected in the market, with oil prices once again rising and some of the recent stock market euphoria beginning to fade.
In the U.S., the upcoming nonfarm payrolls report is expected to be a major focus for traders later today. Analysts are predicting the creation of 85,000 new jobs in July, following a weaker-than-expected gain of 57,000 in June. This data is critical as it could influence the Federal Reserve’s upcoming policy decisions. A weak jobs report would signal economic softness, which could lead to pressure on the Fed to cut interest rates to support employment and economic growth. On the other hand, strong job numbers may keep or even raise rates, aiming to prevent inflation from rising too quickly. Jochen Stanzl warned investors to prepare for 'major short-term price fluctuations' in Frankfurt following the release, as the data could trigger a shift in market sentiment.
In the meantime, DAX companies are preparing to release their quarterly results this Friday, adding another layer of uncertainty. Munich Re noted continued pressure on property and casualty reinsurance prices, while its shares fell almost three percent. Allianz reported record profits in the second quarter, yet its stock is still down by about one percent. Daimler Truck saw its profits fall by 48% during the same period, and its shares lost over two percent. Porsche is also in the spotlight as its parent company, Volkswagen, faces internal discussions over potential job cuts and plant closures, causing its shares to drop nearly one percent.
These mixed results reflect the ongoing challenges for German companies as they navigate inflationary pressures and shifting global demand. With the quarterly reporting season in full swing, investors are carefully watching for any signs of resilience or further downturns. However, it remains unclear whether the results will provide a clear direction for the DAX, which has so far only moved marginally this week. The combination of weak European results, uncertain geopolitical developments, and the pending U.S. jobs report will likely dominate the market’s near-term trajectory.