DAX Index Forecasts: Eurozone Sentiment and US GDP Numbers in Focus

Overview of the DAX Performance on Tuesday

The DAX gained 0.76% on Tuesday. Following a 0.02% rise on Monday, the DAX ended the session at 17,557. Significantly, the DAX reached an all-time high of 17,563. On Tuesday, the DAX extended the winning streak to five sessions.

German Consumer Confidence Improves

On Tuesday, German consumer confidence was in focus. The German GfK Consumer Confidence Index increased from -29.6 to -29.0 for March. Significantly, sub-components of the Index supported bets on an April ECB rate cut.

The willingness to save sub-component increased to 17.4 points, suggesting a weak outlook for consumer spending. Downward trends in consumer spending could dampen demand-driven inflationary pressures.

Tech stocks were among the front-runners on AI hype, with investors seemingly unconcerned with the threat of a more hawkish-than-expected ECB rate path in 2024.

US Consumer Confidence and Durable Goods

On Tuesday, US consumer confidence and durable goods orders reports were in focus. Consumer confidence unexpectedly waned in February, suggesting a possible pullback in consumer spending. The CB Consumer Confidence Index declined from 110.9 to 106.7. Economists forecast an increase to 115.0.

Durable goods orders ex-transport declined by 0.3% in January after falling by 0.1% in December. Economists expected orders ex-transport to increase by 0.2%.

The weaker-than-expected numbers supported bets on an H1 2024 Fed rate cut, sending the DAX to a late European session all-time high. According to the CME FedWatch Tool, the probability of a Fed hold in June slipped from 39.0 to 38.6 on Tuesday.

On Tuesday, the Nasdaq Composite Index and the S&P 500 saw gains of 0.37% and 0.17%, respectively. The Dow declined by 0.25%.

The Tuesday Market Movers

Tech stocks led the way on rising bets on H1 2024 rate cuts. Infineon Technologies and SAP saw gains of 4.03% and 1.04%, respectively.

Auto stocks also had a positive Tuesday session. Mercedes-Benz Group gained 1.12%, with Porsche rising by 1.00%. BMW and Volkswagen ended the day up 0.19% and 0.86%, respectively.

Bank stocks contributed to the gains. Commerzbank and Deutsche Bank rose by 1.12% and 0.67%, respectively.

However, Rheinmetall AG declined by 1.66%, with investors likely locking in profits.

Eurozone Economic Sentiment and the ECB in Focus

On Wednesday, economic sentiment figures for the Eurozone will need consideration. After the German consumer sentiment report, a marked pickup in consumer confidence could impact bets on an April ECB rate cut. Economists forecast the Economic Sentiment Index to rise from 96.2 to 96.7 in February.

A pickup in consumer confidence could fuel consumer spending and demand-driven inflation and force the ECB to delay a rate cut.

Beyond the numbers, investors must consider ECB commentary. ECB Executive Board member Elizabeth McCaul is on the calendar to speak. Views on inflation and the timeline for cutting interest rates would move the dial.

US Economic Calendar: Q4 GDP Numbers and the Fed

Later in the Wednesday session, the US economy will be under the spotlight. 2d estimate Q4 GDP numbers will garner investor interest. According to the first estimate, the US economy expanded by 3.3% in Q4 after growing by 4.9% in Q3.

An upward revision could reduce bets on an H1 2024 Fed rate cut and impact the appetite for riskier assets. Investors must consider sub-components of the report, including personal income, spending, and saving trends.

Other stats include inventory and trade data. However, these will likely play second fiddle to the GDP Report.

Beyond the numbers, FOMC member commentary also needs consideration. Support for an H1 2024 Fed rate cut could drive buyer demand for DAX-listed stocks.

Short-term Forecast

Near-term trends for the DAX hinge on inflation figures for both the euro area and the US. Sticky inflation across the euro area and the US could impact bets on ECB and Fed rate cuts and pressure the DAX.

On Wednesday, the DAX futures were up 19 points, while the Nasdaq mini was down 12 points.

DAX Technical Indicators

Daily Chart

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

A DAX break above the Tuesday all-time high of 17,563 would support a move toward the 17,750 handle.

Economic data and central bank chatter need consideration.

A break below the 17,500 handle would support a fall toward the 50-day EMA.

The 14-day RSI at 74.80 shows the DAX in overbought territory. Selling pressure could intensify at the ATH of 17,563.

4-Hourly Chart

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

A DAX breakout from the 17,563 all-time high would give the bulls a run at the 17,750 handle.

However, a DAX fall through the 17,500 handle could signal a drop to the 17,400 handle.

The 14-period 4-hour RSI at 80.23 shows the DAX sitting in overbought territory. Selling pressure could intensify at the all-time high of 17,563.