DAX Holds Near 26,000 Ahead of ECB Decision

Energy markets are one pressure point. Brent crude is trading at its highest level since June as tensions around the Iran conflict resurface, keeping a geopolitical risk premium in place and raising the prospect of higher input costs for European companies. That matters most for margin-sensitive industrials and transport groups, while energy producers and integrated oil names tend to benefit from firmer crude.

At the same time, Asian tech markets are keeping the broader risk appetite intact. The Kospi and Nikkei 225 both climbed to near two-week highs, reflecting persistent enthusiasm around artificial intelligence despite valuation worries. For DAX investors, that matters because Germany’s heavyweight industrial and technology-linked names often trade with the global growth cycle, and a continued AI bid can cushion weakness elsewhere.

Domestic politics are also back in focus after the AfD won in Saxony-Anhalt, a result that underscores pressure on Chancellor Friedrich Merz’s governing camp and could complicate coalition dynamics. For markets, the immediate issue is not the election result itself but the risk of more policy noise just as Europe heads into a central bank-heavy week.

The European Central Bank is expected to raise rates by 25 basis points to 2.5% on Thursday, according to Metzler Asset Management economist Edgar Walk, while the Federal Reserve follows next week. That sequencing matters for investors because it will determine whether markets continue to price a soft landing or whether higher-for-longer rates start to weigh more visibly on cyclicals, banks and rate-sensitive sectors.

Technically, the DAX remains above its 50-day and 200-day moving averages, but Monday’s slip leaves it vulnerable after Friday’s rejection near the recent peak. The near-term focus is whether the index can reclaim and hold above 26,000 once the ECB decision is out of the way, or whether profit-taking and geopolitical risk keep it rangebound.