DAX Index Today: Eyes on German Production, Earnings, and FOMC Voices

The Overview of the DAX Performance

The DAX rallied 1.40% on Tuesday (May 7). Following a 0.96% gain on Monday (May 6), the DAX ended the session at 18,430.

German Trade and Factory Orders

On Tuesday (May 7), the German economy was in the spotlight, with German trade data and factory orders in focus.

The German trade surplus widened from €21.4 billion to €22.3 billion in March. Economists forecast a trade surplus of €22.4 billion. German exports increased by 0.9% after falling by 1.6% in February. Imports advanced by 0.3% after surging by 3.0% in February.

However, factory orders unexpectedly fell by 0.4% in March after declining by 0.8% in February.

Beyond the economic calendar, corporate earnings also moved the dial. Ferrari, Unicredit, Siemens Healthineers, Deutsche Post, Infineon Technologies, and Zalando SE released earnings results.

RCM/TIPP Economic Optimism Index and the Fed

On Tuesday (May 7), the US economy was also in focus. The RCM/TIPP Economic Optimism Index declined from 43.2 to 41.8 in May. Economists expected the Index to increase to 44.1.

However, the more pessimistic view of the economy was market-friendly. A deteriorating macroeconomic environment could support investor bets on a September Fed rate cut. However, FOMC member chatter also needed consideration.

FOMC member Neel Kashkari raised the threat of a Fed rate hike amidst the sticky inflation environment.

On Tuesday (May 7), the Nasdaq Composite Index fell by 0.10%. The Dow and the S&P 500 saw gains of 0.08% and 0.13%, respectively.

The Tuesday Market Movers

Infineon Technologies surged 12.63% as investors responded to better-than-expected Q2 sales figures. SAP gained 1.68%.

Online retailer Zalando SE rallied 8.47% on better-than-expected operating profits for Q1.

Unicredit earnings beat forecasts, driving demand for bank stocks. Deutsche Bank advanced by 2.81%, with Commerzbank rising by 2.49%.

Auto stocks also had a positive Tuesday session. BMW and Mercedes Benz Group saw gains of 1.12% and 1.06%, respectively. Porsche and Volkswagen ended the session up 0.96% and 0.94%, respectively. Daimler Truck Holdings rose by 0.84%.

Siemens Healthineers declined by 0.88% as investors reacted to its 2024 profit outlook.

German Industrial Production and Corporate Earnings

On Wednesday (May 8), German industrial production figures will garner investor interest. Economists forecast industrial production to decline by 0.6% in March after rising by 2.1% in February.

Weaker-than-expected numbers could test investor expectations of a pickup in German economic activity.

Furthermore, investors should consider corporate earnings results. Munich Re, Siemens Energy AG, Fresenius SE, and Continental AG are among the larger German corporates to release earnings results.

US Economic Calendar: Fed Commentary and US Corporate Earnings

Later in the Tuesday session, investors should consider FOMC member commentary amidst uncertainty toward the September interest rate decision.

FOMC members Philip Jefferson and Lisa Collins are on the calendar to speak before the European closing bell. Investors should track for comments regarding the economic outlook, inflation, and the timing of a Fed rate cut.

Furthermore, corporate earnings also need consideration. Fox Corp. (FOX), Robinhood Markets, Inc. (HOOD), and News Corp. (NWSA) are on the calendar to release earnings results.

Near-Term Outlook

Near-term trends for the DAX will hinge on German industrial production numbers, Fed commentary, and corporate earnings. Better-than-expected earnings results and dovish Fed chatter could continue fueling demand for DAX-listed stocks.

On the Futures markets, the DAX was down by 19 points, while the Nasdaq mini was up by 1 point.

DAX Technical Indicators

Daily Chart

The DAX remained well above the 50-day and 200-day EMAs, sending bullish price signals.

A DAX break above the Tuesday (May 7) high of 18,442 could give the bulls a run at the April 2 all-time high of 18,567.

German industrial production, corporate earnings, and Fed commentary need consideration.

However, a DAX fall through 18,350 could give the bears a run at the 50-day EMA. A drop below the 50-day EMA would bring the 17,615 support level into view.

The 14-day RSI at 62.26 indicates a DAX move to the 18,567 all-time high before entering overbought territory.

4-Hourly Chart

The DAX sat above the 50-day and 200-day EMAs, confirming the bullish price trends.

A DAX breakout from the Tuesday (May 7) high of 18,442 could signal a move toward the April 2 all-time high of 18,567.

Conversely, a DAX fall through the 18,350 handle could give the bears a run at the 50-day EMA.

The 14-period 4-hour RSI at 72.80 shows the DAX in overbought territory. Selling pressure could intensify at 18,500.