DAX 40 nears record high as AUD/USD rises and copper price slips

Macro update

Wall Street rallies as Democratic victory eases political uncertainty: Democrats secured control of both the Senate and House, helping the S&P 500 rise 1.6% to 7,688.62 and the Dow surge 3% as investors welcomed the prospect of legislative gridlock and less political uncertainty.

AI infrastructure shares slide as regulation fears intensify: Data centre operators Hut 8 and IREN plunged 23% and 11% respectively, while the Philadelphia semiconductor index fell to a six-month low. Microsoft and Amazon, however, gained more than 6% as investors bet a slower AI buildout could favour cash-rich industry heavyweights.

Asian chip stocks suffer heavy losses as tech selloff spreads: South Korea’s KOSPI tumbled almost 6% and Taiwan’s benchmark fell more than 3%, while Japan’s Nikkei lost 1.8% as Advantest and Tokyo Electron slumped 14.7% and 9.4%. The broader Topix bucked the trend, gaining 1.2%, with Toyota jumping 16.7% after raising its profit forecast.

Oil heads for biggest weekly fall since 2020: Brent crude plunged almost 9% overnight and traded around $94 a barrel on Thursday, putting it down about 20% this week. Traders expect a weakened Trump administration to be less inclined to escalate the Iran war.

Dollar slips as Treasury yields fall and sterling strengthens: The dollar index touched its lowest level since 30 September, while the US 10-year yield fell to a two-month low of 4.85%. Sterling approached a seven-week high ahead of an expected Bank of England rate increase, while markets continued to price an 80.7% probability of a Fed hike in December.

Gold extends rally to two-week high as dollar and oil weaken: Spot gold climbed 1.6% to $4,123.71 an ounce after Wednesday’s 3.4% jump, its biggest one-day gain since August. A weaker dollar and lower oil prices helped ease inflation concerns and further supported bullion.

DAX 40 is gunning for its record high 

The DAX 40's strong rally following the US midterm elections has taken the index close to its 26,618 late August all-time high. En route lies the mid-August high at 26,541 got hit but capped the advance on Wednesday. If both levels were to be exceeded, the minor psychological 27,000 region would be next in line.

Support sits between the 4 September-to-late August highs at 26,168-to-26,106.

Short-term outlook: bullish while above the 3 November low at 25,678

Medium-term outlook: bullish while above the 8 October low at 24,793

DAX 40  daily candlestick chart

AUD/USD resumes its ascent

AUD/USD formed a bullish engulfing pattern on Wednesday and may well extend its rise to its September-to-November resistance line at $0.7043. If breached, the 200-day simple moving average (SMA) at $0.7056 and October peak at $0.7068 may be revisited.

Minor support may be found around the 12 October high at $0.6995.

Short-term outlook: bullish while above the 4 November $0.6954 low

Medium-term outlook: neutral while above the $0.6894 mid-October low but below the $0.7068 late October high, a rise above which would turn our forecast bullish

AUD/USD daily candlestick chart

Copper price slips

The price of Copper remains under pressure with the 200-day simple moving average (SMA) and September trough at $6.2752-to-$6.2363 being back in sight. If the next lower early November low at $6.2151 were to be slipped through, the 10 June low at $6.1251 and 17 July low at $6.1215 may be reached next.

Minor resistance may be spotted between the 1 October low and 4 November high at $6.4148-to-$6.4152.

Short-term outlook: bearish while below the 4 November high at $6.4148

Medium-term outlook: neutral while holding above the 3 November low at $6.2151, a fall through which would turn this forecast bearish

Copper daily candlestick chart