ECB HOLDS RATES, SETS 2019 TIMELINE FOR HIKES – DAX BULLISH
DAX 30 is currently trading at 12080- higher by 0.59% from the last closing. The index has been gaining momentum since the last trading session. Further back, it has closed in the positive, in 3 out of the past 4 trading sessions. The only exception was Tuesday when it closed in marginally negative territory (0.16%) after news that China is reportedly set to call upon the WTO for authorization to inflict sanctions on the U.S which would intensify the ongoing trade war and lead global markets lower.
The main event for European Markets on Thursday was ECB’s interest rate decision. The European Central Bank decided to keep its benchmark interest rates unchanged at 0% on Thursday, which was widely expected by the markets. During the press conference, President Mario Draghi talked about the state of monetary policy, and reaffirmed his confidence in the economic state of the euro zone. The ECB chief did however warn, that global risks, such as financial market volatility and protectionism had gained prominence. The markets have deciphered the short, medium and longer term inflation and economic growth forecasts from the ECB president to imply that the earliest possible timing of an interest rate hike by the ECB would be at/around Sep 2019.
In a generally supportive development, news out of the US indicates that the U.S. Government has invited Chinese officials to restart trade talks late on Wednesday. This has positively affected most global markets.
Among the top gainers in the DAX 30, Commerz bank shares topped the DAX, rising 2.94% after UBS analysts upgraded the stock to a “buy”. Also, Volkswagen shares added 1.76%, BMW gained 1.2%, Infineon rose by 2.8% and Dailmer rose 0.94% at the time of writing.
On the economic front, German CPI (MoM) for the month of August released earlier on Thursday rose by 0.1% which met market expectations. Also in July the CPI rose by the same percentage. Further the German HICP (YoY) for the month of August also out on Thursday met the expectations of market by rising 1.9% with the previous being the same. Further the ZEW Indicator of Economic Sentiment for Germany rose by 3.1 points from the previous month to -10.6 in September 2018, beating market expectations of -14.0.
On the technical front, the RSI is currently at 38.17% and suggests that the market can move in the upward direction. The current price is above the MA5.The current price is below the middle line of the Bollinger bands but is heading upwards.
So, overall the market setup seems to be positive, trades can be initiated with tight Stop Loss and Take Profit targets to book profit for the short term.
Trade Suggestion-Limit Buy at 12040. Take Profit at 12090 .Stop Loss at 12015.