The German DAX has been falling for the bulk of Tuesday trading, as traders are starting to worry about interest rates and energy again. At this point, we are testing significant support in this index.
DAX
The German DAX has found itself struggling during trading on Tuesday as we continue to see interest rates rise around the world, Germany included.
This has a major influence on industrial companies, as the price of energy is a major component of the calculation for profitability. With Germany seemingly at the mercy of whatever happens between the United States and Iran, it is getting to be a bit dicey as we head toward the winter.
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It is worth noting that the German 10-year is now yielding 3.33%, and the market is in the process of trying to break down below the crucial 26,000 level decisively. If it can in fact continue that downward pressure, it could very well send this market reeling to the downside.
Crucial 26,000 Level and 50-Day EMA Support
The inflationary concerns continue to be a major problem for Germany, despite the fact that the DAX should be benefiting from the fiscal behavior of the German government, which is planning on spending a lot of infrastructure and military budget this year, as well as the next several.
Generally speaking, that is good for markets, but right now, we have the outside influence of the Middle East continuing to cause problems. And of course, we also have to worry about the overall value of the euro, which is pretty stable, but remarkably resilient.
If the economy starts to suffer at the hands of higher inflation around the world, Germany would be hard-pressed to avoid that itself. A turnaround from here is possible, but the 50-day EMA should be an area of support. If it does not hold up, that would be a bad sign.
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