The DAX advanced by 0.82% on Wednesday (May 15). Reversing a 0.14% loss from Tuesday (May 14), the DAX ended the session at 18,869. Significantly, the DAX struck a new all-time high of 18,893.
On Wednesday (May 15), economic data for the Eurozone drew investor interest. According to the second estimate numbers, the Eurozone economy expanded by 0.3% in Q1, unchanged from the first estimate. In Q4 2023, the Eurozone economy grew by 0.1%.
Moreover, industrial production increased by 0.6% in March after rising by 1.0% in February. Economists forecast a 0.5% increase.
The pickup in economic activity aligned with expectations of an improving macroeconomic environment.
Later in the Wednesday session, US retail sales and the all-important US CPI Report warranted investor attention.
The annual core inflation rate declined from 3.8% to 3.6% in April. Additionally, the inflation rate fell from 3.5% to 3.4% in April. The softer inflation numbers fueled investor expectations of a September Fed rate cut, driving buyer demand for DAX-listed stocks.
US retail sales figures were also market-friendly, stalling in April. A pullback in consumer spending could dampen demand-driven inflation.
Rising bets on a September Fed rate cut fueled investor appetite for riskier assets. On Wednesday (May 15), the Nasdaq Composite Index rallied 1.40%. The Dow and S&P 500 saw gains of 0.88% and 1.17%, respectively.
Commerzbank rallied 5.13% as the markets responded to a profit surge, with Deutsche Bank advancing by 0.16%. Merck ended the Wednesday session up 4.77% as investors reacted to better-than-expected earnings results.
However, the German auto sector struggled mid-week.
Daimler Truck Holding slid by 1.36%, with BMW and Porsche seeing losses of 0.82% and 0.91%, respectively. Volkswagen fell by 0.53%, with Mercedes Benz Group declining by 0.48%.
The ECB Financial Stability Review will warrant investor attention on Thursday (May 16). Views on financial conditions and geopolitical risks will likely be investor focal points.
However, the report is unlikely to influence the ECB rate path. Rising bets on a September Fed rate cut could spur the ECB doves into action. Investors should monitor ECB commentary throughout the session. ECB support for ECB rate cuts beyond June could drive buyer demand for DAX-listed stocks.
Furthermore, investors should consider corporate earnings. Siemens AG and Deutsche Telekom AG are among the big names to release corporate earnings on Thursday (May 16).
US labor market data will attract investor interest on Thursday (May 16). Tighter labor market conditions could test investor bets on a September Fed rate cut.
Economists forecast US initial jobless claims to fall from 231k to 220k in the week ending May 11.
Other stats include the Philly Fed Manufacturing Index, industrial production numbers, and housing sector data.
However, FOMC member commentary will likely have more impact on market risk sentiment. FOMC members Michael Barr, Patrick Harker, and Loretta Mester are on the calendar to speak during the European session. Support for a September Fed rate cut could drive buyer demand for DAX-listed stocks.
Near-term trends for the DAX will hinge on central bank commentary and corporate earnings. Support for multiple ECB rate cuts and a September Fed rate cut could send the DAX to a new all-time high. Nevertheless, corporate earnings remain a focal point.
On the Futures markets, the DAX and the Nasdaq mini were up 11 and 32 points, respectively.
The DAX remained well above the 50-day and 200-day EMAs, sending bullish price signals.
A DAX break above the Wednesday (May 15) all-time high of 18,893 could signal a move to 20,000.
Central bank commentary and corporate earnings need investor consideration.
However, a fall below 18,750 could give the bears a run at the 18,500 handle.
The 14-day RSI at 69.95 shows the DAX on the border with overbought territory. Selling pressure may intensify at the Wednesday all-time high of 18,893.
The DAX hovered comfortably above the 50-day and 200-day EMAs, affirming the bullish price signals.
A DAX breakout from the all-time high of 18,893 could give the bulls a run at 20,000.
Conversely, a DAX break below the 18,800 handle could bring the 18,500 handle into view.
The 14-period 4-hour RSI at 79.37 shows the DAX in overbought territory. Selling pressure could increase at the Wednesday (May 15) all-time high of 18,893.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.