Daily Analysis DAX40 - 5 Sep 2023

European shares hit one-week lows on Tuesday as economically sensitive sectors led a selloff. Concerns over slowing global growth stemmed from weak service sector data in China and the Eurozone.

The pan-European STOXX 600 index (SXXP) dropped 0.7%, marking its fifth consecutive loss. Sectors tied to China, like luxury (STXLUXP) and construction & materials (SXOP), suffered due to China's slowest service sector growth in eight months.

Additionally, the Eurozone's business activity contracted faster than expected last month. The services industry slipped into contraction, raising concerns about a potential recession. HCOB's final Composite Purchasing Managers' Index (PMI) for the Eurozone fell to 46.7 in August from 48.6 in July.

This has increased calls for the European Central Bank (ECB) to maintain its current policy. Money markets now estimate a 25% chance of a 25 basis point rate hike on September 14, down from 30% before the PMI data.

Consumer inflation expectations in the Eurozone rose slightly, adding to concerns about inflation falling short of the ECB's 2% target. Several brokerage downgrades, including Roche, Credit Agricole, and Commerzbank, further weighed on stocks. Retailers also declined following J.P. Morgan's downgrade due to worries about grocery price deflation.

The current price range encompasses support at 15,500 and resistance at 16,400. In the short term, the forecast suggests that if DAX surpasses the 16,000 mark, there's a possibility of it advancing towards 16,500, even after retracing to the 15,500 level.

Resi Level 3	Resi Level 2	Resi Level 1	Suppo level 1	Suppo level 2	Suppo level 3
16600	16400	16200	15650	15400	15200