The DAX is showing signs of recovery as investor sentiment around artificial intelligence (AI) improves, providing a boost to European equities. Strong earnings from SK Hynix have reignited demand for AI-related stocks, while anticipation builds for earnings reports from Alphabet and Microsoft. This optimism has helped the DAX trade modestly higher, though the broader market remains mixed.
AI sentiment has been a key driver for the DAX, given its exposure to technology companies. Concerns about an AI-driven correction had previously weighed on global equities, but SK Hynix’s strong results have eased some of those worries. Additional developments, such as Anthropic’s potential record-setting IPO and OpenAI’s infrastructure expansion, are further supporting the AI theme.
Corporate earnings have been a mixed bag, with banks like UBS and Santander underperforming, while Deutsche Bank, Standard Chartered, and BNP Paribas have reported stronger updates. The DAX’s resilience is attributed to the broader improvement in risk appetite, despite the uneven earnings picture.
The focus now shifts to central bank decisions, with the Federal Reserve and European Central Bank (ECB) set to meet over the next two days. The Fed is expected to leave rates unchanged, but market participants will scrutinize the accompanying communication for clues on future policy. The ECB faces a similar challenge, with investors looking for hints about a potential December rate hike amid rising energy prices and political uncertainty.
Technically, the DAX has shown stability, breaking above its 21-day exponential moving average and reclaiming the 25,500 level. If it can surpass 25,700 resistance, a run towards 26,000 and beyond could follow. However, support levels at 25,500 and 25,400 remain crucial, with long-term support at 24,800-900. The index’s ability to hold above recent lows will be critical, with US tech earnings and central bank decisions posing significant event risks.