Dax Index News: DAX Eyes 19,500 Amid Rate Cut Speculation and US Inflation Data

DAX Rebounds Amid Rate Cut Speculation

On Wednesday, October 9, the DAX advanced by 0.99%, reversing a 0.20% loss from the previous session, to close at 19,255.

Rising bets on ECB and Fed interest rate cuts drove demand for riskier assets.

Continental Guidance Drove Auto Stocks Higher

Auto stocks recovered from Tuesday’s losses as investors reacted positively to auto supplier Continental AG forecasting improved profitability in Q3. Continental AG surged 7.23%, while Daimler Truck Holding gained 2.34%. BMW and Volkswagen ended the session up by 1.23% and 1.04%, respectively.

Chinese Mainland and Hong Kong Markets Impact Dax Trends

On Wednesday, investors continued to react to the lack of fresh stimulus measures after the National Holiday. The Hang Seng Index extended its losses from Tuesday, with the CSI 300 and Shanghai Composite also ending the day in negative territory. The risk-off sentiment led the DAX into negative territory early in the European session.

German Trade Data Signals Demand Slump

On Wednesday, trade data from Germany sent more recession warnings. While exports increased by 1.3% in August, imports tumbled by 3.4%, widening the trade surplus from €16.9 billion in July to €22.5 billion in August.

The marked decline in imports suggests a weakening demand, aligning with recent factory orders and private sector PMI data. Will these signals push the ECB to act faster?

A deteriorating economic outlook could boost bets on multiple Q4 2024 ECB rate cuts.

Expert Views on the German Economy

Hamburg Commercial Bank Chief Economist Dr. Cyrus de la Rubia commented on the latest private sector PMI data, stating,

“With orders drying up at an alarming rate, it is hard to picture any kind of recovery happening soon. What is particularly troubling, looking back over the last 30 years, is how long this slump in export orders has dragged on – it is unprecedented. We attribute this to the “China shock”. Many companies, especially in the automotive and mechanical engineering sectors, have not yet found convincing answers to the sudden intensification of competition.”

Focus Shifts to Private Consumption

On Thursday, October 10, retail sales figures from Germany could provide insights into consumer sentiment. Weak retail sales may dampen demand-driven inflation, boosting bets on a possible 25-basis point October ECB rate cut. However, poor sales may also support concerns about a 2024 economic contraction.

Nevertheless, rising expectations of multiple Q4 2024 ECB rate cuts could drive buyer demand for DAX-listed stocks.

FOMC Meeting Minutes and Market Trends

After the European closing bell, the FOMC Meeting Minutes after the European close provided no surprises, leaving bets on a November rate cut intact. Optimism for a 25-basis point cut supported gains across US Equity Markets.

On Wednesday, the Dow advanced by 1.03%, while the Nasdaq Composite Index and the S&P 500 saw gains of 0.60% and 0.71%, respectively.

US CPI Report in the Spotlight

On Thursday, the US CPI Report could be pivotal for the Fed and market risk sentiment. Economists expect the US annual inflation rate to drop from 2.5% in August to 2.3% in September. Softer inflation could raise investor bets on a possible November Fed rate cut. If the inflation rate drops below the Fed’s 2% target, the Fed could cut rates by 50 basis points.

A more dovish Fed rate path could push the DAX toward 19,500. Conversely, hotter-than-expected inflation could temper bets on a November Fed rate cut, possibly sending the DAX toward 18,750.

Near-Term Outlook

In the short term, DAX trends will likely hinge on central bank commentary and the US CPI Report. Softer US inflation and support for multiple Q4 2024 rate cuts may boost demand for DAX-listed stocks. Conversely, hotter US inflation could impact buyer appetite for DAX-listed stocks.

The futures markets signal a positive start to the Thursday session, with the DAX and Nasdaq mini up 18 and 3 points, respectively. HK and Mainland China-listed equity markets saw morning gains on PBoC policy movers, setting the tone for the European session.

Investors should stay alert to updates on the Middle East conflict, central bank chatter, and economic indicators. An escalation in the Middle East conflict could fuel a flight to safety and a DAX drop below 18,750. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

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

A return to 19,350 could signal a move toward the all-time high of 19,492. Furthermore, a break above 19,492 may give the bulls a run at 19,750.

Investors should consider updates from the Middle East, Euro area economic data, the USS CPI Report, and central bank commentary, which may influence near-term market sentiment.

Conversely, a fall through 19,000 could give the bears a run at the 50-day EMA.

The 14-day RSI at 60.06 indicates a climb to 19,500 before entering overbought territory.