Morning Brief: DAX Index, Nikkei 225 and Silver Rally Extends

Summary:

The DAX index rallied ahead of the important ECB decision as crude oil price falls as silver and euro rises. Asian stocks also rose

European futures are in an upward trend ahead of the important ECB interest rate decision. In Germany, futures tied to the DAX index are up by 32 points (0.25%) while those tied to the CAC 40 are up by 16 points (0.30%). However, the FTSE 100 is the only major outlier, having dropped by 0.30%.

These stocks are rising a day after Wall Street notched its best day in months led by technology companies like Apple and Microsoft. The Dow Jones rose by 440 points while the Nasdaq 100 and S&P 500 rose by 300 and 68 points, respectively. Elsewhere, in Asia, the Nikkei 225 is up by 0.85% while the Hang Seng is down by about 0.10%.

The biggest news scheduled for today is the interest rates decision by the ECB. As I mentioned earlier in the ECB preview, analysts expect the bank to leave rates and quantitative easing unchanged. That is because the European economy is in a recovery path as evidenced by recent data.

At the same time, the ECB decision comes at a time when the euro has strengthened substantially against peers. It is up against the dollar by more than 3% in the past 6 months. And the euro index has gained by more than 5% during this period.

Elsewhere, the price of crude oil has resumed the downward trend after a report by the EIA cast worries about rising demand. The agency increased the output target by the United States a few days after Saudi Arabia announced that it would slash prices. Meanwhile, in the precious metals industry, gold price is down by about 0.10% while silver is up by 0.50%.

DAX index technical chart

The chart below shows that the DAX index rose sharply yesterday as investors became enthusiastic about the market. Today, the index is continuing this trend, gaining 32 points. It is trading at €13,290, which is higher than yesterday’s low of €12,865. On the daily chart, the price has resisted moving below the blue ascending trendline. It is also above the short and longer-term moving averages.

Therefore, based on the spectacular performance by Wall Street yesterday, there is a possibility that the price will continue rising as bulls target the next resistance at €13,452.