Dax Index News: Demand Concerns Weigh on DAX Amid Mixed Global Data

DAX Drops on Demand Concerns

The DAX Index opened Thursday, January 9, down 0.36% to 20,256 as investors digested key inflation data from China and economic indicators from Germany.

Disappointing inflation data from China raised concerns about demand for German goods, weighing on the DAX futures in the Asian session. German economic data further underscored demand woes, signaling the need for further policy support.

Sector Performance: Demand Outlook Hits Autos

Porsche slid by 2.70% on Thursday morning, while BMW and Volkswagen saw losses of 1.67% and 1.42%, respectively. Mercedes-Benz Group shares also opened in negative territory. Economic indicators from China and Germany weighed on the auto sector as US tariff threats lingered.

Banking stocks followed the auto sector into negative territory, with Commerzbank and Deutsche Bank under selling pressure. Fears of US deregulation impacting the competitiveness of EU banks weighed on the banking sector.

German Economic Data Offers Temporary Relief

Germany’s industrial production and trade data drew interest ahead of Thursday’s European opening bell.

Industrial production increased by 1.5% in November after falling 1.0% in October. However, the upswing may be short-lived, given November’s slump in factory orders.

Trade data painted a mixed picture. Exports rose 2.1% in November, rebounding from a 2.8% decline in October. However, imports tumbled 3.3%, aligning with December’s Manufacturing PMI survey, which signaled a sharp fall in demand and output.

Germany’s economic woes have bolstered expectations of a January ECB rate cut, driving demand for German stocks. Lower borrowing costs could boost demand, company earnings, and valuations. A more dovish ECB rate path would also weaken the EUR, mitigating the potential effects of US tariffs.

US Markets Digest Mixed Labor Market Data

US equity markets had mixed performances on Wednesday, January 8. The Dow and S&P 500 advanced by 0.25% and 0.16%, respectively, while the Nasdaq Composite Index declined by 0.06%.

US labor market data sent conflicting signals. The ADP reported a 122k increase in private sector jobs in December, below a consensus 140k rise. Year-end hiring was the weakest since August 2024. However, initial jobless claims fell to a 12-month low of 201k (week ending January 4), down from 211k (week ending December 28).

While the data suggested the labor market remained resilient, the pace of job creation slowed.

Labor market numbers added uncertainty to the Fed’s rate path. A tight labor market may boost wage growth and consumer spending. Higher spending may fuel demand-driven inflation, potentially delaying a Fed rate cut.

Key Data to Watch: US Jobs Report Looms Large

Friday’s US Jobs Report could dictate the timing of a Fed rate cut. Softer wage growth and higher unemployment may renew expectations for a March rate cut., supporting demand for riskier assets. Conversely, a lower unemployment rate and higher wages could sink expectations of an H1 2025 move.

Additionally, any fresh tariff threats targeting EU goods could hit DAX-listed companies reliant on US trade, particularly automakers.

Near-Term Outlook

DAX trends remain tied to economic data, central bank commentary, and US tariff developments. Upbeat data or tariff threats may pull the DAX toward 19,750. However, softer numbers and tariff silence could drive the DAX toward its record high of 20,523 on central bank rate cuts.

As of Thursday morning, the Nasdaq-mini futures dropped by 109 points, potentially impacting demand for German stocks.

DAX Technical Indicators

Daily Chart

Despite the morning retreat, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs), sending bullish price signals.

If the DAX breaks above 20,350, the Index could climb to the record high of 20,523. A breakout from 20,523 may enable the bulls to target 20,750.

Conversely, a DAX break below 20,000 could signal a drop toward the 50-day EMA. A fall through the 50-day EMA would bring the 19,675 support level into play.

With the 14-day RSI at 58.70, the DAX may climb to its 20,523 record high before entering overbought territory (RSI higher than 70).

Final Thoughts

The DAX remains highly sensitive to global developments, including Euro area and US economic data, tariff policies, and central bank commentary. While ECB rate cut expectations lend support, investors must closely monitor US tariff risks and Fed commentary to navigate the dynamic market landscape.

Investors should stay updated on global developments here to navigate the ever-changing market landscape.