Dax Index News: Can the DAX Hold 20,000 as Industrial Production Sides?

DAX Climbs to New Record High on Policy Bets

Can the DAX break the 20,500 barrier, or will the US Jobs Report dampen momentum?

On Thursday, December 5, the DAX advanced by 0.63%, following Wednesday’s 1.08% rally, closing at 20,359. Significantly, the DAX climbed to a record high of 20,373.

Expectations for multiple ECB rate cuts and speculation about Germany adjusting its debt ceiling drove the DAX higher.

However, despite the DAX’s breakout, uncertainty lingers. Will the DAX sustain its bullish momentum, or could Trump’s tariff threats and upcoming economic data weigh on sentiment?

Sector Highlights: Autos and Banks Advance

Auto stocks extended their gains from Wednesday on hopes of ECB rate cuts boosting demand. BMW advanced by 2.40%, while Volkswagen ended the session up 0.98%. Mercedes Benz Group and Porsche also posted gains.

Bank stocks also advanced as investors reacted favorably to news from France. Deutsche Bank and Commerzbank rallied 2.71% and 1.68%, respectively. On Thursday, hopes that lawmakers will pass a budget drove demand for French banking stocks. BNP Paribas surged 2.60%, while Credit Agricole gained 2.30%.

German Factory Orders Signal Demand Slump

Factory orders declined by 2% in October, following a 4.2% surge in September. Weaker demand aligned with recent Manufacturing PMI surveys that showed demand at its weakest in six months. Germany’s Manufacturing PMI remained in contractionary territory at 43.0 in November.

The weak numbers supported expectations of multiple ECB rate cuts to bolster the Euro area economy. Lower interest rates would weaken the EUR/USD, potentially boosting overseas demand. A fall in borrowing costs may also support company earnings and stock prices.

German Industrial Production Falls Again

On Friday, December 6, industrial production drew investor interest. Production unexpectedly fell by 1.0% month-on-month in October after tumbling 2.0% in September.

Production continued declining despite September’s temporary surge in factory orders. Moreover, October’s factory orders also underscored Germany’s industrial sector woes. Factory orders slid by 1.5% in October.

Later in the European session, Eurozone GDP and employment figures for Q3 2024 need consideration. However, barring a marked revision to the data, the numbers are unlikely to influence sentiment toward the ECB rate path.

US Data Hints at Labor Market Softening

US initial jobless claims increased from 215k (week ending November 23) to 224k (week ending November 30). While jobless claims increased slightly, job cuts indicated a potential weakening in the US labor market.

A weaker labor market could soften wage growth, dampening consumer spending and demand-driven inflation. A softer inflation outlook would support a more dovish Fed rate path, potentially boosting demand for DAX-listed stocks.

According to the CME FedWatch Tool, the chances of a December Fed rate cut dropped from 78.1% on December 4 to 71.8% on December 5. Despite this, the probability of a Fed rate cut remained higher than on November 27.

US Market Trends and the Looming US Jobs Report

How might a sentiment toward the US economy influence the global markets and near-term DAX trends?

US equity markets closed the Thursday session in negative territory. The Nasdaq Composite Index declined by 0.17%, ending a four-day rally. The Dow and the S&P 500 saw declines of 0.55% and 0.19%, respectively.

Investors turned cautious ahead of Friday’s pivotal US Jobs Report.

US Economic Calendar: US Jobs Report in Focus

In Friday’s US session, the US Jobs Report will garner investor interest. Economists expect the unemployment rate to rise from 4.1% in October to 4.2% in November and for wage growth to slow.

Weak labor market data is likely to boost bets on multiple Fed rate cuts, potentially supporting demand for DAX-listed stocks.

Other US economic indicators include consumer sentiment numbers. However, these are likely to play second fiddle to the US Jobs Report.

Near-Term Outlook

In the near term, DAX trends hinge on the US Jobs Report, central bank comments, and US Tariff-related chatter.

Silence on US tariff threats and support for Fed and ECB rate cuts could drive the index toward 20,500. However, better-than-expected US labor market data and expectations of a less dovish ECB rate path may drag the DAX below 20,000.

Beyond the data, US tariff threats remain a headwind, possibly impacting demand for German goods. Weaker US demand and increased competition from China is likely to adversely affect company earnings and stock prices.

As of Friday morning, futures signaled a testy session ahead. DAX futures were down by 41 points, while the Nasdaq mini futures slipped by 1 point.

Investors should monitor economic data, central bank commentary, and tariff-related news for trading opportunities.

DAX Technical Indicators

Daily Chart

After extending its winning streak to six sessions, the DAX sits comfortably above the 50-day and 200-day EMAs, sending bullish price signals.

If the DAX breaks above its all-time high of 20,373, it could target 21,500 next. Furthermore, a breakout from 20,500 would bring 21,000 into play.

German industrial production, the US Jobs Report, central bank commentary, and US tariff-related updates will influence DAX trends.

Conversely, a DAX break below 20,150 could signal a drop toward 20,000. A fall through 20,000 may enable the bears to target 19,750.

With the 14-day RSI at 72.83, the DAX remains in overbought territory (> 70). Selling pressure could intensify at Thursday’s all-time high of 20,373.

Where do you think the DAX is heading next? Will it break 20,500, or are we in for a correction? Explore in-depth forecasts and actionable strategies here for navigating DAX volatility.