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DAX 40, AUD/USD and copper prices drop but find support
Technical analysis of the DAX 40, AUD/USD and copper prices as they try to stabilise.
Macro update
Oil shock drives markets: Brent surged above $113, rising around 7%, after reports the US may consider military action against Iran, heightening fears of prolonged supply disruption.
Geopolitics dominate sentiment: The Strait of Hormuz remains closed and negotiations are stalled, with investors focused on escalation risks and the potential for a sustained global energy shock.
Equities under pressure: Asian indices declined, with Japan’s Nikkei down around 1% and regional benchmarks weaker, as higher oil prices and geopolitical uncertainty outweighed positive earnings momentum.
Big tech split reaction: Alphabet and Amazon gained after strong results, Microsoft was broadly unchanged, while Meta fell as increased AI spending raised concerns over returns.
AI spending theme builds: Major tech firms are ramping up investment, with combined 2026 AI capital expenditure expected to reach roughly $650bn, supporting growth optimism but also raising margin concerns.
Rates and FX backdrop: The Fed held rates but signalled growing internal dissent, global bond yields moved higher, and the dollar remained firm near ¥160 as markets reassessed the outlook for policy easing.
DAX 40 finds support
The DAX 40 fell through its 200-day simple moving average (SMA) at 24,109 to 23,716, close to the 50% retracement of the January-to-March decline, before recovering and trying to close its gap with Wednesday's 23,881 low. If so, a rise back towards the 200-day SMA may ensue.
Failure at 23,716 would lead to a slip through the March-to-April uptrend line at 23,693 which may engage the mid-April low at 23,482.
Short-term outlook: bearish while below the 27 April 24,382 high
Medium-term outlook: bullish while above the 13 April low at 23,482
AUD/USD comes off multi-year highs
AUD/USD is seen swiftly coming off this week's $0.7200 high and so far dipped to a two-week low at $0.7102. While it holds, a minor bounce towards the $0.7150 region may ensue.
Were a fall through $0.7102 to be seen, though, the 55-day simple moving average (SMA) at $0.7056 may be next in line.
Short-term outlook: neutral while remaining above the 29 April $0.7102 low on a daily chart closing basis, if not, we would turn bearish
Medium-term outlook: bullish while above the 13 April low at $0.6988
Copper price trades in two-week lows
The copper price slid through its March-to-April uptrend line and dropped to $5.8519 before recovering. While this level underpins, the 21 April low at $5.9653 may be revisited. Together with the minor psychological $6.0000 region it may short-term cap the upside, though.
Failure at $5.8519 would probably lead to a deeper correction towards the $5.7500 area taking place.
Short-term outlook: bullish while holding above the 29 April $5.8519 low
Medium-term outlook: bullish while trading above the 9 April $5.6918 low
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