DAX Futures Up 207 Points Ahead of German Stats and ECB Chatter

It was a bullish end to a bullish week for the DAX, which rose by 1.44% to wrap up the week at 15,961.

Economic data from Germany delivered a bearish start to the day. However, market reaction to Apple Inc.’s (AAPL) corporate earnings from Thursday and Adidas (ADS) provided support ahead of the US session.

The US Jobs Report eased US recessionary fears on Friday to support a bullish end to the Friday session. While the numbers beat forecasts, bets on a June Fed interest rate hike remained subdued.

According to the CME FedWatch Tool, the probability of a 25-basis point Fed interest rate hike in June increased from 0% to 8.5% in response to the Jobs Report. However, the Jobs Report wiped out the bets on a June rate cut, with the chances of a rate cut falling from 9.2% to 0.0%.

Easing banking sector jitters also delivered support, with the auto sector also making solid gains despite the weak German economic indicators from the day.

On Friday, the NASDAQ Composite Index rallied by 2.25%, with the Dow Jones and S&P 500 seeing gains of 1.65% and 1.85%, respectively.

US Jobs Report Eases Recessionary Fears

It was a relatively quiet Friday session on the European economic calendar. However, German factory orders tested buyer appetite going into the European session.

German factory orders tumbled by 10.7% in March versus a forecasted 2.2% decline. Miscellaneous vehicles (-47.4%) and motor vehicles & vehicle parts (-12.2%) were a drag.

In contrast, the US Jobs Report beat forecasts to deliver a bullish end to the session.

Nonfarm payrolls jumped by 253k in April versus a forecasted 180k increase. In March, nonfarm payrolls rose by 165k. Significantly, average hourly earnings were up 4.4% year-over-year versus 4.3% in March. Economists forecast average hourly earnings to increase by 4.2%.

As a result of the better-than-expected NFP number, the US unemployment rate fell from 3.5% to 3.4%. Economists forecast the unemployment rate to rise to 3.6%.

The Market Movers

It was a bullish day for the auto sector. Continental and BMW led the way, with gains of 4.23% and 3.60%, respectively. Mercedes-Benz Group rose by 2.49%, with Porsche and Volkswagen ending the day up 1.84% and 1.76%, respectively.

It was also a bullish session for the banks. Commerzbank and Deutsche Bank saw gains of 5.06% and 4.52%, respectively.

The Day Ahead for the DAX

It is a relatively quiet day ahead on the European economic calendar. This morning, German industrial production will draw interest.

Following a tumble in factory orders in March, the production numbers need to impress to ease concerns about the German economy.

Economists forecast German industrial production to fall by 1.3% in March. In February, industrial production rose by 2%.

While the German industrial production numbers will draw interest, investors should monitor ECB member commentary. ECB Chief Economist Philip Lane is on the calendar to speak today. Investors should also monitor ECB member chatter with the media.

Looking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider.

A lack of stats will leave Fed chatter and market risk sentiment to influence ahead of the US CPI Report on Tuesday.

Beyond the economic calendar, the banking sector, the US debt ceiling, and corporate earnings also need consideration.

DAX Technical Indicators

Resistance & Support Levels

The DAX has to avoid the 15,893 pivot to target the First Major Resistance Level (R1) at 16,030. A return to 16,000 would send a bullish signal. However, the DAX would need central bank chatter and the German industrial production numbers to support a breakout.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at 16,099. The Third Major Resistance Level (R3) sits at 16,0305.

A fall through the pivot would bring the First Major Support Level (S1) at 15,824 into play. However, barring an ECB and German data-fueled sell-off, the DAX should avoid sub-15,750 and the Second Major Support Level (S2) at 15,687. The Third Major Support Level (S3) sits at 15,481.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The DAX sits above the 50-day EMA (15,764). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA (15,764) would support a breakout from R1 (16,030) to give the bulls a run at R2 (16,099). However, a German industrial production and ECB-fueled sell-off would deliver a fall through S1 (15,824) to bring the 50-day EMA (15,764) into view. A fall through the 50-day EMA would send a bearish signal.

The DAX Futures Sees Green

Looking at the futures markets, DAX was up 207 points, with the NASDAQ mini gaining 5. The Dow was up 20.

For a look at the economic events, check out our economic calendar.