Dax Index News: Bullish Momentum on ECB Bets; Will Business Sentiment Weigh?

DAX Advances on ECB Rate Cut Bets

The DAX rallied 0.92% on Friday, November 22, following Thursday’s 0.74% gain, closing at 19,323.

Easing geopolitical tensions, ECB rate cut bets, and sentiment toward the US economy drove demand for DAX-listed stocks.

Real Estate, Retail, and Tech Stocks Lead the Gains

Zalando SE surged 6.36% on expectations of aggressive ECB rate cuts. Lower interest rates could increase disposable income, potentially boosting private consumption. Adidas advanced by 1.56%.

Real estate sector stocks may benefit from lower borrowing costs, potentially boosting demand and house prices. Vonovia rallied 4.76%.

Tech stocks Infineon Technologies and SAP posted gains of 3.23% and 0.53%, respectively.

However, concerns about the services sector weighed on bank stocks. Commerzbank and Deutsche Bank saw declines of 1.54% and 2.87%, respectively. Fears of looser US banking regulations under the Trump administration lingered, potentially impacting EU banks’ competitiveness.

German Private Sector Sends Warning Signals

Germany’s HCOB Services PMI slid unexpectedly from 51.6 in October to 49.4 in November, signaling a contraction. While the Manufacturing PMI increased in November, the sector remained well below the 50 threshold. The private sector PMIs painted a grim picture of the German economy as markets consider potential US tariffs on German goods.

Significantly, the November data followed finalized GDP numbers that showed the German economy expanding by just 0.1% quarter-on-quarter in Q3 2024, down from a preliminary 0.2%.

The PMI numbers and softer German economic growth raised bets on a 50-basis point December ECB rate cut. Hopes for a more dovish ECB rate path boosted demand for DAX-listed stocks.

Expert Views on the Eurozone Economy

Oxford Economics European Macroeconomic specialist Daniel Kral reacted to the grim PMI numbers from the Euro area, stating,

“Rather than improving, PMIs signal Eurozone growth stuttering in Q4 with services joining manufacturing in contraction. Nothing good in the details, and this is before US tariffs hit. With ECB rates where they are, Trichet’s policy mistake in 2011 will soon be a fond memory.”

The Eurozone’s Services PMI dropped from 51.6 in October to 49.2 in November, adding to concerns about the regional economy.

German Business Sentiment in Focus

On Monday, November 25, Germany’s Ifo Business Climate Index will be in focus after Friday’s grim PMI numbers. Economists expect the Ifo Business Climate Index to drop from 86.5 in October to 86.0 in November.

A larger-than-expected decline may increase bets on a 50-basis point December ECB rate cut, supporting a DAX move toward 19,500. Conversely, an unexpected improvement in business sentiment could weigh on the DAX.

US Services PMI Indicates a Robust US Economy

On Friday, the S&P Global Services PMI increased from 55.0 in October to 57.0 in November. Accounting for around 80% of the US GDP, the November data painted a rosier picture of the US economy.

The DAX responded positively to the US PMI data, reaching a session high of 19,383.

US Equity Markets Extend Gains on Positive US Economic Indicators

On Friday, November 22, US equity markets extended their gains from Thursday, with the Dow rallying 0.97%. The Nasdaq Composite Index and the S&P 500 rose 0.16% and 0.35%, respectively.

Boeing (BA) contributed to the Dow’s gains, surging by 4.09% on a brighter outlook under Trump’s presidency. Falling 10-year US Treasury yields also boosted sentiment.

Dallas and Chicago Fed Economic Indicators in Focus

Turning to Monday’s US session, the Chicago Fed National Activity Index (CFNAI) and Dallas Fed Manufacturing Index will draw interest.

Economists expect the Chicago Fed National Activity Index to increase from -0.28 in September to -0.15 in October. Better-than-expected data could indicate an improving macroeconomic environment, supporting demand for riskier assets. CFNAI trends reflect inflation and overall economic activity.

Economists forecast the Dallas Fed Manufacturing Index to increase from -3 in October to +1 in November. A pickup in manufacturing sector activity could also signal an improving macroeconomic backdrop.

Better-than-expected US data could support a DAX move toward 19,500. Market optimism toward the US economy may counter falling bets on a December Fed rate cut. Conversely, unexpected falls in the Indexes could drag the DAX toward 19,000.

Near-Term Outlook

In the near term, DAX trends will hinge on German business sentiment data, central bank commentary, and geopolitical risk. A dovish ECB stance and weaker business sentiment may lift the DAX, while geopolitical tensions or unexpectedly strong German data could weigh on the index.

As of Monday morning, futures signaled a positive session. DAX futures jumped by 129 points, while the Nasdaq mini futures were up 111 points.

Investors should closely track economic indicators, central bank commentary, and US Treasury yields for market cues.

DAX Technical Indicators

Daily Chart

After Friday’s rally, the DAX remains above the 50-day and 200-day EMAs, affirming bullish price signals.

A DAX breakout from 19,350 could signal a move toward 19,500. Furthermore, a return to 19,500 could enable the bulls to target the all-time high of 19,675.

Key drivers include Germany’s business sentiment data, US economic indicators, and central bank commentary.

Conversely, a DAX fall through the 50-day EMA could signal a break below 19,000. A drop below 19,000 may bring the 18,750 level into play.

With the 14-day RSI at 53.32, the DAX could break above the 19,675 all-time high before entering overbought territory.