Dax Index News: Earnings Results and IMF Growth Outlook to Impact Today’s Forecast

DAX Slides as Focus Shifts to Earnings and the US Presidential Election

On Monday, October 21, the DAX declined by 1%, reversing a 0.38% gain from the previous session, closing at 19,461.

Investor caution ahead of crucial earnings results and sentiment toward the Fed rate path impacted demand for DAX-listed stocks.

Major Stock Movers: Tech, Insurance, and Bank Stocks Struggle

On Monday, Munich Re Group declined by 2.95% as investors reacted to Jefferies downgrading the stock to hold. The downgrade impacted the broader insurance sector, with Hannover Re falling 1.75%.

Tech stocks also trended lower as investors awaited chipmaker SAP to release its earnings results. SAP and Infineon Technologies saw declines of 0.99% and 2.57%, respectively.

Deutsche Bank also faced selling pressure as investors awaited its earnings results, declining by 0.56%. Commerzbank ended the session down 1.69%.

German Producer Prices Signal Waning Demand

Germany’s producer prices declined by 1.4% year-on-year in September after falling 0.8% in August. The sharper fall in producer prices suggested a weakening demand environment, potentially easing inflationary pressures.

Moreover, September’s figures also highlighted weak demand, aligning with expectations of a German economic contraction in 2024.

Expert Commentary on the Euro Area Economy

Frederik Ducrozet, Head of Macroeconomic Research at Pictet Wealth Management, recently commented on the Eurozone economy, stating,

“Long-term growth expectations are down to an all-time low of less than 1.3%. Draghi: “Europe faces a choice between paralysis, exit or integration. Exit has been tried. Paralysis is becoming untenable. Integration is our only hope left.”

US Conference Board Leading Economic Indicator

On Monday, the US CB Leading Economic Indicator (LEI) declined by 0.5% in September after dropping by 0.3% in August. The continued downward trend in the LEI impacted buyer demand for riskier assets.

However, rising 10-year US Treasury yields had a greater impact on market risk sentiment. Concerns about the US Presidential Election, the Middle East conflict, and the Fed rate path pushed yields higher.

According to the CME FedWatch Tool, the probability of a 25-basis point December Fed rate cut fell from 76.8% on Friday, October 18, to 64.8% on Monday, October 21. A less dovish Fed rate path may impact DAX-listed stocks, as higher-than-expected borrowing costs may hurt corporate profits.

US Equity Market Overview

On Monday, US equity markets had a mixed start to the session, with the Dow and the S&P 500 declining by 0.80% and 0.18%, while the Nasdaq Composite Index gained 0.27%.

IMF World Economic Outlook in Focus

On Tuesday, October 22, the IMF will release its World Economic Outlook figures. Growth projections for China, the US, and the global economy could influence buyer demand for DAX-listed stocks.

Expectations of 5% growth in China and a resilient US economy could push the DAX toward 19,650. Conversely, downward revisions from July’s growth forecasts could pull the DAX toward 19,350.

US Economic Calendar: Fed Speakers in Focus

Later in the Tuesday session, investors should track Fed speakers. Their views on the US economy, the labor market, and the Fed rate path require consideration. Support for Fed rate cuts in November and December could boost demand for riskier assets.

However, recent US inflation and labor market data have signaled a robust economy. Calls for a single Fed rate cut in Q4 2024 could drag the DAX down to 19,350.

Near-Term Outlook

In the near term, trends will likely depend on the IMF projections, central bank commentary, and corporate earnings. Dovish ECB and Fed chatter could counter weaker IMF growth projections and may support a DAX move toward 19,650. However, corporate earnings results could be crucial, with SAP and Deutsche Bank among the big names releasing earnings this week.

Futures signal a mixed start to the Tuesday session, with the DAX futures up 70 points while the Nasdaq mini futures dropped 72 points, respectively.

Investors should stay vigilant, with the IMF growth projections, corporate earnings, and central bank commentary in focus. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

Despite Monday’s loss, the DAX hovers well above the 50-day and 200-day EMAs, affirming bullish price signals.

A breakout from 19,500 could support a move toward the October 17 all-time high of 19,675. A break above 19,675 may bring 19,750 into play.

Investors should consider the IMF projections, corporate earnings, and central bank speeches, which may influence near-term market sentiment.

Conversely, a drop below 19,350 could signal a fall toward 19,000 and the 50-day EMA.

The 14-day RSI at 59.40 indicates a DAX climb to 19,750 before entering overbought territory.