Dax Index News: DAX Nears Key Levels on Trump Fears, ECB Bets – Analysis and Trends

DAX Extends Losing Streak to Three Sessions

On Thursday, October 31, the DAX declined by 0.93%, following a 1.13% loss from the previous session, closing at 19,078.

Fears of a Trump second term as US president impacted demand for DAX-listed stocks. Markets expected Trump to introduce punitive tariffs, potentially affecting the ailing Euro area economy.

Euro Area inflation and corporate earnings also contributed to Thursday’s losses.

Major Stock Movers: US Earnings Impact Tech Stocks

Tech stocks extended their losses from Wednesday. Infineon Technologies and SAP slid by 2.36% and 2.16%, respectively. Microsoft (MSFT) and Meta Platforms (META) affected demand for tech stocks after their earnings reports.

Meanwhile, auto stocks continued to reel as concerns about weakening demand from China intensified. BMW and Mercedes-Benz Group saw declines of 1.53% and 1.24%, respectively, while Volkswagen fell by 1.05%.

Eurozone Inflation Comes in Hot

On Thursday, October 31, Eurozone inflation figures impacted investor bets on a 50-basis point December ECB rate cut. The annual inflation rate rose from 1.9% in September to 2.0% in October, while core inflation remained steady at 2.7%.

The hotter-than-expected inflation numbers followed upbeat retail sales figures from Germany, which may fuel demand-driven inflation. Falling bets on a 50-basis point December ECB rate cut pushed the DAX lower.

US Personal Income and Outlays Report Test Rate Cut Bets

On Thursday, the Personal Income and Outlays Report further tempered investor bets on a 25-basis point December Fed rate cut. Personal spending trended higher, signaling higher inflation. Additionally, the Core PCE Price Index, the Fed’s preferred inflation indicator, held steady at 2.7% year-on-year in October.

Sticky inflation and a pickup in consumption could give the Fed hawks a stronger footing to delay post-November Fed rate cuts into 2025.

According to the CME FedWatch Tool, the chance of a 25-basis point December Fed rate fell from 72.2% on October 30 to 71.1% on October 31.

US Equity Market Overview

On Thursday, October 31, US equity markets extended their losses from Wednesday. The Nasdaq Composite Index slid by 2.76%, while the Dow and the S&P 500 fell by 0.90% and 1.86%, respectively.

Microsoft and Meta Platforms earnings dragged the tech sector deep into negative territory. However, Apple (AAPL) and Amazon.com (AMZN) released upbeat earnings results during after-hours trading, potentially supporting tech stock demand on Friday.

US Jobs Report Crucial for the Fed Rate Path and the DAX

In Friday’s US session, the all-important Jobs Report will require consideration. Economists expect nonfarm payrolls to increase by 113k in October after a 254k surge in September while forecasting a steady unemployment rate of 4.1%.

A sizeable increase in nonfarm payrolls and an unexpected fall in unemployment may sink bets on a December Fed rate cut. A more hawkish Fed rate path could impact demand for riskier assets, potentially dragging the DAX below 19,000. In contrast, a higher unemployment rate and sub-100k increase in nonfarm payrolls, coupled with bets on a soft US landing, could drive the DAX to 19,350.

Near-Term Outlook

In the near term, DAX trends will hinge on the US Jobs Report, central bank commentary, and US Presidential Election-related news. A tighter US labor market and speculation about a Trump victory could adversely impact demand for DAX-listed stocks, potentially pulling the DAX below 19,000. Conversely, softer labor market data and rising support for a Kamala Harris win could push the DAX to 19,350.

Futures indicate a positive start to the Friday session. DAX mini futures were up by 20 points, and Nasdaq mini futures by 68 points, respectively. Upbeat economic data from China may set the tone for the Friday session.

Investors should stay alert, with the US Presidential Election and crucial economic data in focus. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

Despite three consecutive days in the red, the DAX holds above the 50-day and 200-day EMAs, affirming bullish price signals. However, a significant drop below these levels could shift sentiment to a bearish outlook.

A return to 19,150 could support a move toward 19,350. Furthermore, a breakout from 19,350 may bring the 19,500 market into play.

Investors should consider today’s US Jobs Report, the US Presidential Election poll, and economic data from China, which will likely affect market sentiment.

Conversely, a DAX break below the 50-day EMA and 19,000 could allow the bears to target the 18,750 level.

The 14-day RSI at 43.66 indicates a DAX drop to 18,750 before entering oversold territory.