Dax Index News: ECB Rate Decision Looms as DAX Extends Losses – Market Outlook Today

DAX Extends its Losses from Tuesday as the ECB Rate Decision Approaches

On Wednesday, October 16, the DAX declined by 0.27%, following a 0.11% loss from the previous session, closing at 19,433.

Corporate earnings results and concerns about weakening demand from China left the DAX in negative territory as investors awaited Thursday’s ECB interest rate decision.

China Demand Concerns Impact the DAX

Adidas stock tumbled by 6.26% despite raising its full-year forecasts. Personal and Household Goods and Luxury Indexes declined after LVMH reported disappointing Q3 sales. The results highlighted the effects of weaker demand from China on related stocks.

Auto stocks also trended lower, with Mercedes-Benz Group and BMW falling 0.87% and 0.72%, respectively. Stellantis reported a potential 20% year-on-year fall in vehicle shipments in Q3, impacting the broader auto sector.

Additionally, the fallout from ASML’s earnings and outlook continued to impact chipmakers, with Infineon Technologies declining by 0.33%.

Expert Views on Euro Area Inflation and ECB Rate Path

European Macroeconomic Specialist at Oxford Economics, Daniel Kral, commented on recent inflation trends, stating,

“The high inflation episode in Europe is over & central bank pivots are in the making. Sveriges Riksbank board members already openly talking about risk of persistent inflation undershoot (hello 2010s).”

The Eurozone Economy and the ECB in the Spotlight

On Thursday, October 17, Eurozone inflation will draw investor interest as the ECB interest rate decision looms. According to preliminary figures, the Eurozone’s annual inflation rate eased from 2.2% in August to 1.8% in September. A downward revision could raise investor expectations of ECB rate cuts later today and in December.

A 25-basis point ECB rate cut on Thursday and support for a December ECB rate cut could push the DAX toward 19,750. However, hints of delaying a December rate cut could pull the DAX below 19,350.

Other economic indicators include Eurozone trade data, which will likely play second fiddle to the inflation figures.

US Market Trends

On Wednesday, US Equity Markets partially recovered losses from Tuesday’s tech-driven rout.

The Nasdaq Composite Index and the S&P 500 saw gains of 0.28% and 0.47%, respectively, while the Dow advanced by 0.79%.

US Retail Sales and Jobless Claims

Later in the Thursday session, US retail sales and labor market data may influence sentiment toward the Fed rate path. Economists expect retail sales to increase by 0.3% in September after a 0.1% rise in August.

Additionally, economists forecast initial jobless claims to remain unchanged at 258k in the week ending October 12.

A larger-than-expected rise in retail sales and drop in jobless claims could temper bets on multiple Q4 2024 Fed rate cuts. A less dovish Fed rate path could pull the DAX toward 19,350. Conversely, steady jobless claims and weaker retail sales could support expectations for multiple Fed rate cuts, driving the DAX toward 19,750.

Beyond the economic calendar, investors should also consider earnings results.

Near-Term Outlook

In the near term, trends will hinge on Euro area inflation-related data, the ECB monetary policy decision, and corporate earnings. Softer inflation and ECB support for a December ECB rate cut could drive demand for DAX-listed stocks. However, investors should consider the effects of US economic indicators on the Fed rate path and the DAX.

On Thursday, the futures pointed to a weak opening, with the DAX and the Nasdaq mini down by 10 and 55 points, respectively.

Investors should stay alert, with inflation, the ECB, corporate earnings, and the US economy in focus. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

The DAX hovers well above the 50-day and 200-day EMAs, affirming bullish price signals.

A break above the October 15 all-time high of 19,634 could support a move toward 19,750. Furthermore, a breakout from 19,750 may allow the bulls to test the 20,000 level.

Investors should consider economic data, corporate earnings, and the ECB policy decision, which may influence near-term market sentiment.

Conversely, a break below 19,350 could signal a fall toward 19,000.

The 14-day RSI at 62.20 suggests a DAX move to 19,750 before entering overbought territory.