DAX Index News: Market Momentum Faces Test with Upcoming US Economic Reports
Market Overview
On Wednesday, August 14, the DAX advanced by 0.41%, following a 0.48% gain on Tuesday to close at 17,812. Significantly, the DAX extended its winning streak to seven sessions.
Wednesday: DAX Market Movers
- Hannover Re topped the DAX, rallying 2.29% as investors continued to respond to Monday’s better-than-expected earnings report.
- Auto stocks recorded solid gains on rate cut hopes, with Mercedes Benz Group and BMW gaining 1.44% and 0.91%, respectively.
Eurozone Employment Weakens
On Wednesday, employment figures for the Eurozone signaled a weaker labor market environment. Employment increased by 2.9% year-on-year in Q2 2024, down from 3.0% in Q1 2024.
Weaker labor market conditions could affect wage growth, consumer confidence, and spending. Downward trends in consumer spending could dampen demand-driven inflation, supporting a more dovish ECB rate path. Lower borrowing costs could boost company profits and stock prices.
Expert Insights: The German Economic Outlook
On Wednesday, Bloomberg Western Europe Economic Team Leader Zoe Schneeweiss shared a Bloomberg article discussing Eurozone employment, stating,
“Euro-zone employment growth weakens in a sign of trouble ahead.”
US CPI Report Supports Fed Rate Cut Bets
On Wednesday, the all-important US CPI Report supported investor expectations of multiple 2024 Fed rate cuts.
The annual inflation rate eased from 3.0% in June to 2.9% in July, driving buyer demand for DAX-listed stocks.
US Market Trends: Fed Rate Cut Bets Resonate
On Wednesday, the US equity markets extended their gains from Tuesday. The Dow and S&P 500 increased by 0.61% and 0.38%, respectively, while The Nasdaq Composite Index gained 0.03%.
US Economic Calendar
On Thursday, August 15, US jobless claims and retail sales could influence market risk sentiment. Weaker-than-expected figures could retrigger fears of a US economy recession, possibly impacting DAX-listed stocks.
US Jobless Claims
Economists forecast initial jobless claims to increase from 233k in the week ending August 3 to 235k in the week ending August 10.
An unexpected spike in jobless claims may raise expectations of a US hard landing. A deteriorating US labor market could affect wage growth, consumer confidence, and spending. A pullback in consumer spending could adversely affect the US economy since it contributes over 60% to GDP.
Retail Sales
Economists predict retail sales will increase by 0.3% in July after stalling in June. Weaker-than-expected numbers could further fuel speculation about a hard US landing.
Expert Views on US Inflation and the Fed Rate Path
Arch Capital Global Chief Economist Parker Ross commented on the July CPI Report, saying,
“This is further evidence that the factors that previously made inflation look sticky will continue to normalize / fade in the year ahead. Thus, the Fed should also be normalizing monetary policy and start skating where the puck is going for once.”
Near-Term Outlook
Near-term DAX trends will hinge on US jobless claims and retail sales figures. Weaker-than-expected numbers could reignite US recession fears, impacting buyer demand for riskier assets. Conversely, upbeat numbers could support hopes of a soft US economic landing, possibly boosting buyer demand for DAX-listed stocks.
In the futures markets, the DAX and the Nasdaq Mini were up by 61 and 63 points, respectively.
Investors should stay alert with the US labor market and consumer spending trends in focus. Monitor the news wires, the economic calendar, and expert commentary to manage trading strategies. Stay up-to-date with our latest news and analysis to manage risk.
DAX Technical Indicators
Daily Chart
The DAX hovered above the 200-day EMA while remaining below the 50-day EMA, affirming the bearish near-term but bullish longer-term price signals.
A break above 18,000 could support a move toward the 50-day EMA. Furthermore, a breakout from the 50-day EMA could bring 18,500 into view.
US jobless claims and retail sales require consideration on Thursday.
Conversely, a DAX drop below 17,800 could give the bears a run at the 17,615 support level and the 200-day EMA.
The 14-day RSI at 45.80 suggests a DAX drop to the 17,003 support level before entering oversold territory.
