Dax Index News: Breaking 19,750 Resistance? ECB and PMI Hold the Key – Analysis

DAX Targets All-Time High: Is 20,000 in Sight?

On Friday, November 29, the DAX rallied 1.03%, following Thursday’s 0.85% gain, closing at 19,627.

German retail sales and Eurozone inflation figures bolstered bets on ECB rate cuts, driving demand for DAX-listed stocks.

The question remains: Can the DAX sustain its bullish momentum, or will private sector PMIs and the ECB derail the rally?

Tech and Autos Stocks Drive the DAX toward Record Levels

Infineon Technologies led the gains, rallying 2.97%, while SAP advanced by 1.70%. Lower interest rates could reduce borrowing costs for capital-intensive companies, supporting company earnings.

MTU Aero gained 2.94% on a positive demand outlook for 2025. The engine manufacturer’s gains followed reports of Airbus aiming to meet its 2024 production targets.

Auto stocks found much-needed support, with dip-buyers likely driving demand after a dismal November. BMW ended the session up 1.60%, with Porsche advancing by 0.90%. Mercedes Benz Group and Volkswagen also posted gains.

German Retail Sales and Eurozone Inflation Drive December Rate Cut Bets

German retail sales sent more recessionary signals, sliding by 1.5% in October. Private consumption contributes over 50% to the German economy. Furthermore, the slump in retail sales may dampen demand-driven inflation, supporting a more dovish ECB rate path.

However, the Eurozone annual inflation increased from 2.0% in October to 2.3% in November, exceeding the ECB’s 2% target.

Nevertheless, sentiment toward the waning Eurozone economy continued supporting bets on a 25-basis point December ECB rate cut and further rate cuts in 2025.

In October, Fitch Ratings projected a 25-basis point December ECB rate cut and quarterly rate cuts throughout 2025.

Manufacturing PMI and Tariff Risks in Focus

On Monday, December 2, finalized German and Eurozone Manufacturing PMI numbers will draw interest. The preliminary reports showed the Eurozone’s manufacturing sector experienced a deeper contraction.

Downward revisions to the PMIs could support a more dovish ECB rate path to bolster the Eurozone economy. Significantly, the Eurozone manufacturing sector’s troubles come ahead of potential US tariffs targeting EU goods. US tariffs on EU goods may adversely impact US demand for EU goods and the Eurozone’s manufacturing sector.

Other stats include Eurozone unemployment data. However, barring an unexpected change in the unemployment rate, the PMIs will likely be the focal point.

Expert Views on Eurozone Inflation and the ECB Rate Path

Speculation about the Eurozone economy and ECB policy intensified on Friday. Pictet Wealth Management Head of Macroeconomic Research Frederik Ducrozet remarked on the Eurozone’s inflation data, saying,

“Dovish alert! The sequential momentum of euro area core HICP looks very weak this month. Services prices *declined* by 0.07% MoM on a seasonally-adjusted basis, the weakest in over three years, more than offsetting last month’s strength. Could raise eyebrows in Frankfurt.”

ECB President Christine Lagarde could give insights into the ECB rate path.

US Market Trends Lend Support

On Friday, November 29, US equity markets reversed their losses from Wednesday. The Nasdaq Composite Index rallied 0.83%, the S&P 500 gained 0.58%, and the Dow advanced by 0.42%.

10-year US Treasury yields tumbled to 4.18%, driving demand for riskier assets. Expectations of a December Fed rate cut likely pulled yields lower.

US Economic Calendar: Manufacturing Sector in Focus

In Monday’s US session, the US ISM Manufacturing PMI may influence market sentiment. Economists expect the ISM Manufacturing PMI to increase from 46.5 in October to 47.5 in November. A higher-than-expected PMI could fuel optimism about the US economy, potentially boosting demand for riskier assets. Conversely, a deeper contraction may drag the DAX below 19,500.

However, the PMI numbers are unlikely to influence the Fed rate path, as the manufacturing sector accounts for less than 20% of the US GDP.

Near-Term Outlook

In the near term, DAX movements will hinge on PMI data, central bank commentary, and US Tariff-related news. Higher-than-expected PMIs, a less dovish ECB rate path, and US tariff threats could pull the DAX below 19,500. Conversely, weaker PMIs and ECB support for a 50-basis point December ECB rate cut may counter tariff jitters, potentially pushing the DAX toward 19,750.

As of Monday morning, futures signaled a testy session ahead. DAX futures were down by 7 points, while the Nasdaq mini futures dropped by 43 points.

China’s Caixin Manufacturing PMI increased from 50.3 in October to 51.5 in November, which could set the tone for Monday’s European session.

Investors should monitor Eurozone economic data, central bank remarks, and tariff-related updates for trading opportunities.

DAX Technical Indicators

Daily Chart

On Monday, the DAX sits above the 50-day and 200-day EMAs, affirming bullish price trends.

If the DAX breaks its all-time high of 19,675, it may target 19,750 next. Furthermore, a break above 19,750 may enable the bulls to target 20,000.

Euro area economic data, central bank commentary, and US tariff-related updates will influence DAX trends.

Conversely, a DAX break below 19,500 may signal a drop toward 19,350. A fall through 19,350 would bring the 50-day EMA into play.

With the 14-day RSI at 60.30, the DAX could climb to 19,750 before entering overbought territory.

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