A positive tone in global bourses provided net support, especially with a benign US inflation reading, and the DAX was able to post a closing high for the month as bond markets stabilised.
There was a significantly more positive tone in Asian equity markets on Tuesday, which helped underpin Frankfurt stocks at the open and there was also a positive influence from a renewed gain in oil prices.
This combination of factors put upward pressure on stocks and the DAX opened significantly higher with a steady advance during the morning session.
The financial sector held a solid tone, which helped underpin wider market sentiment.
There were no significant Eurozone data releases during the day, although there was some caution ahead of Thursday’s ECB policy meeting. Although most analysts expect policy to be unchanged at this meeting, policy hints from President Draghi surrounding the bond-purchase scheme will be very important for underlying market sentiment.
The headline US inflation data was in line with expectations with a 0.3% monthly increase, the largest gain for five months. This took the annual rate to 1.5%, the highest reading for close to two years. The underlying data was weaker than expected, however, with a 0.1% monthly increase and 2.2% annual gain.
European equity markets strengthened in an immediate response to the data before hitting resistance around 10,650.
Although US indices retreated from opening highs, there was fresh support ahead of the European close. The DAX index ended with a gain of 127.98 points and 1.22% at 10.631.55, which registered the highest close for four weeks.
Uncertainty surrounding the ECB policy meeting is liable to dampen activity on Wednesday, although hopes for a generally dovish Draghi tone could offer some net market support. US trends and energy prices will also be monitored closely during the day.
DAX 30 4H Chart