DAX 40, AUD/USD and copper price slide
Technical analysis of the DAX 40, AUD/USD and copper price, all of which are under pressure.
Macro update
Asian markets tumble as inflation fuels rate concerns: Hotter-than-expected US inflation strengthened expectations of tighter Federal Reserve policy, weighing heavily on technology stocks. Japan’s Nikkei plunged 4.8% by midday, South Korea’s KOSPI dropped 8%, triggering its first circuit breaker since July, and MSCI’s Asia-Pacific index excluding Japan fell sharply.
AI and semiconductor shares lead regional sell-off: Samsung Electronics, SK Hynix and SoftBank Group suffered steep losses, while Tokyo-listed Advantest slumped 13.9%. Reports of financial distress at CoreWeave and growing doubts about AI funding and capital expenditure added to concerns over higher interest rates.
US stocks slide as rate worries deepen: The S&P 500 fell 1.1% and the Nasdaq dropped 1.9%, with semiconductor shares declining for a sixth consecutive session. Oracle, CoreWeave and Dell led losses among AI-related stocks, although Apple closed above a $5 trillion market capitalisation for the first time.
Markets scale back Fed rate-hike bets: Expectations of an October increase initially surged following the inflation data, but comments from Fed officials Michelle Bowman and Mary Daly suggesting policymakers could wait tempered market pricing. Investors now expect rates to remain unchanged on 28 October, ahead of producer price data, retail sales and a speech by Chair Kevin Warsh.
Dollar retreats as Treasury yields fall: Safe-haven demand pushed the 10-year Treasury yield down to around 5.1%, pulling the dollar index back to 101.99 from an 18-month high. The euro and sterling recovered, while the Australian dollar weakened after an unexpected fall in employment and emerging Asian currencies came under pressure, with the Philippine peso hitting a record low.
Oil eases while gold rebounds on shifting risks: Brent crude slipped to around $104 a barrel as US moves to ease sanctions on shadow-fleet shipping offset escalating attacks in the Strait of Hormuz. Gold climbed 1% to approximately $4,147 an ounce, supported by the weaker dollar amid continued uncertainty over interest rates and energy supplies.
DAX 40 back under pressure
The DAX 40's three day advance has given way to another down leg with the 15-to-24 September lows at 25,164-to-25,173 being eyed. If slid through, the 200-day simple moving average (SMA) at 24,870 and the 1-to-8 October lows at 24,832-to-24,793 may be revisited. If fallen through, the July lows at 24,697-to-24,651 may be reached next.
A rise above this week's high at 25,453 and the slightly higher 6 October peak at 25,522 may engage the late September high at 25,617.
Short-term outlook: bearish while below the 6 October high at 25,522
Medium-term outlook: bearish while below the 17 September high at 25,800, targeting the late June low at 24,548
DAX 40 daily candlestick chart
AUD/USD resumes its descent
AUD/USD's sharp reversal from Wednesday's $0.7013 high is rapidly taking the cross to its 8 October low at $0.6933. Below it awaits the 1 October low at $0.6904.
Resistance may now be spotted between the 6-to-12 October highs at $0.6990-to-$0.6995, ahead of this week's $0.7013 high. Were it to be bettered, the 200-day simple moving average (SMA) at $0.7040 may be revisited. If overcome, the 19 August low at $0.7067 would probably be next in line.
Short-term outlook: bearish while below the 14 October $0.7013 high
Medium-term outlook: bearish while below the 24 September $0.7045 high
AUD/USD daily candlestick chart
Copper price drops
The price of Copper is seen swiftly coming off this week's $6.8408 high and is slipping towards support found between the 1-to-9 October lows at $6.5756-to-$6.5452. If fallen through, the early September low at $6.5097 may be revisited.
Minor resistance sits between the late August-to-early September and late September-to-early October highs at $6.7243-to-$6.7424. More significant resistance sits between the 12-to-14 October highs at $6.8327-to-$6.8408.
Short-term outlook: bearish while below the 14 October high at $6.8408
Medium-term outlook: neutral while above the 29 July low at $6.2206
Copper daily candlestick chart
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