DAX Pre-Market Friendly: Falling Oil Prices Provide Support, US Interest Rate Decision in Focus

An important support comes from falling oil prices. A barrel (159 liters) of North Sea Brent crude became 1.6 percent cheaper in Asian trading to $86.91. The price for a barrel of North Sea Brent crude for delivery in September fell at times to around $87. US oil WTI was quoted 1.9 percent weaker at $81.02. The reason for the sharp price decline is the hope that the US and Iran could resume negotiations on a solution to the Middle East war. Last week, Brent peaked above the $100 mark.

Oil Price Slide and Geopolitical Hope

The hope for a diplomatic solution to the conflict between the US and Iran had brightened sentiment on European stock markets at the start of the week. The recent pause in US attacks over the weekend now fueled renewed hopes for de-escalation in the conflict that has been raging since the end of February. Until the weekend, the United States had reported attacks on Iran for 13 consecutive nights. Iran had also indicated that it would suspend its attacks for the time being.

With the decline in oil prices, the focus of markets is shifting to the US central bank, the Fed, and the upcoming figures from major technology companies, explained Daniela Hathorn, analyst at online broker capital.com. It will now be crucial whether inflation continues to decline and whether the high AI investments translate into sustainable returns. Heavyweights such as Microsoft, Amazon, Meta, and Apple will present their quarterly figures this week.

AI Concerns Weigh on Asian Markets

Concerns about the enormous financing costs of the AI boom are currently also weighing on Asian stock markets. A sell-off among chip manufacturers caused South Korea's leading index, the Kospi, to plunge by more than nine percent at one point. Trading in Seoul was suspended for 20 minutes due to the heavy price losses. Shares of South Korean memory chip manufacturers Samsung Electronics and SK Hynix lost around 13 percent. Both companies have lost almost half of their market value since their record highs last month. They suffered in US trading as well as in Japan and South Korea, partly significantly, due to concerns about growing Chinese competition and excessive financing requirements.

Japan's Nikkei index is falling by more than four percent. Last week, high AI investments at Tesla and Google parent Alphabet had sobered investors. In addition, investors already have their eye on the US Federal Reserve's interest rate decision on Wednesday. According to traders, the probability of a quarter-percentage-point rate hike stands at 38 percent.

US Central Bank and Quarterly Figures in Focus

Financial markets already consider a rate hike possible in July, but expect a real policy shift more likely in September, said Kevin Thozet, market expert at Carmignac. By then, the Fed will have more reliable economic data available.

Mercedes-Benz and TeamViewer Report Quarterly Figures

On Tuesday, Mercedes-Benz and software provider TeamViewer, among others, opened their books. From April to June, operating profit increased by 21.5 percent to 1.55 billion euros, after a collapse of two-thirds a year earlier. Revenue fell only slightly by 3.3 percent to 32 billion euros despite another slump in sales in China. Mercedes cut its revenue forecast following a weak quarter, while TeamViewer stuck to it despite a decline in revenue. The DAX company wants to further improve costs and productivity in the second half of the year, explained Group CEO Ola Källenius.

On US stock markets the previous evening, trading presented a mixed picture: the Dow Jones closed 0.5 percent higher at 52,210 points. The tech exchange index Nasdaq gave up 0.2 percent to 24,932 points. The broader S&P 500 marked time with a minimal gain at 7,413 points. With a closing price of 25,817.89 points, the DAX also ended the day at its highest level of all time.

The article was written by Carolin Ludwig, editorial team at finanzen.net, with material from dpa-AFX and Dow Jones Newswires.