DAX forecast: Risk assets surge as Strait of Hormuz re-opens

Our bullish DAX forecast has taken another boost as risk assets surged Friday after the re-opening of the Strait of Hormuz promised to ease an oil shock. Global stocks surged, crude oil plunged and Bitcoin broke a key level.

 

What is causing markets to surge?

 

Risk appetite has picked up rather smartly over the past few days, and today’s had a proper leg-up. Equities, crypto and the FX space all pushed higher after Iran declared the Strait of Hormuz “completely open” to commercial traffic. That’s been enough to nudge traders further out along the risk curve after what’s already been a remarkable run. Oil’s taken a knock, and the dollar’s slipped back as a result. European markets closed higher while US indices advanced further into unchartered territory and look set to chalk up a third straight week of gains. Bitcoin has just smashed through a major resistance zone around $75K-76K area.

 

US markets hit record levels

 

It has been quite the turnaround, really, given how jittery things were not long ago. The shift started as signs first emerged that Washington and Tehran were at least attempting to dial things down after tensions had been stirring up the energy markets. Then the ceasefire happened, and now this. On top of that, the ongoing enthusiasm around artificial intelligence, coupled with solid earnings, has kept the bid well supported, sending the Nasdaq 100 to new record levels.

 

Traders are buying risk assets across the board

 

While we are not completely home and dry yet, traders are bidding up risk assets and will be asking questions later. Donald Trump has said a naval blockade will remain firmly in force until a deal is struck. He’d previously suggested Iran had made some key concessions in talks with the US. There were even reports floating about that one proposal involved the US releasing $20 billion in frozen Iranian funds in exchange for Tehran giving up its enriched uranium stockpile. Trump, however, later pushed back on that, insisting that “no money will exchange hands in any way, shape, or form.” Elsewhere, there’s a 10-day ceasefire now in place between Israel and Lebanon.

 

 

 

-- Content created by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R