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Dax Index News: Economic Data and Fed Rate Cut Bets to Impact DAX Outlook Today
By:
Key Points:
- DAX rebounds 0.50%, driven by Siemens and Infineon gains, as Fed rate cut bets boost market sentiment.
- US retail sales data eases recession fears, boosting DAX-listed stocks with hopes of a resilient US economy.
- Eurozone inflation data could spark further ECB rate cut bets, lifting DAX stocks on lower borrowing costs.
In this article:
Market Overview
On Tuesday, September 17, the DAX advanced by 0.50%, recovering a 0.35% loss from the previous day to close at 18,726.
Key DAX Market Movers
Zalando SE led the gains, surging 7.33%. Kingfisher raised the lower end of its annual profit forecast, boosting demand for retail stocks.
Rate-sensitive Siemens Energy AG and Infineon Technologies rallied 4.26% and 3.24%, respectively, on ECB and Fed rate cut bets.
Auto stocks also contributed, with Volkswagen and Porsche ending the day up 1.36% and 1.18%, respectively.
German Investor Sentiment Slumps
On Tuesday, the German ZEW Economic Sentiment Index tumbled from 19.2 in August to 3.6 in September, signaling a grim economic outlook.
ZEW President Professor Achim Wambach, PhD, remarked on the September report, stating,
“Hopes for an early improvement in the economic situation are dwindling. In the current survey, we are once again observing a noticeable decline in economic expectations for Germany.”
Eurozone Inflation in Focus
On Wednesday, September 18, finalized inflation figures for the Eurozone will draw investor interest.
According to the preliminary report, the annual inflation rate fell from 2.6% in July to 2.2% in August. A downward revision could raise investor bets on a Q4 2024 ECB rate cut, possibly boosting demand for DAX-listed stocks. Lower borrowing costs could improve corporate earnings and stock prices.
US Retail Sales Signal Resilience
On Tuesday, US retail sales data eased investor concerns about a hard US economic landing. Retail sales increased by 0.1% in August after a 1.1% surge in July. Contributing over 60% to US GDP, upward trends in private consumption could bolster the economy.
Other US data, including industrial production and housing sector data, also beat expectations.
Nonetheless, the CME FedWatch Tool signaled an increased chance of a sizeable Fed rate cut. The probability of a 50-basis point Fed rate cut increased to 65.0% on Tuesday, up from 62.0% on Monday. Easing fears of a hard landing and bets on a sizeable Fed rate cut drove buyer demand for DAX-listed stocks.
US Market Trends
On Tuesday, September 17, the US equity markets experienced another mixed session. The Dow slipped by 0.04%, while the Nasdaq Composite Index and the S&P 500 advanced by 0.20% and 0.03%, respectively.
US Economic Calendar
On Wednesday, the US housing sector will be in focus. Building permit and housing start numbers for August could give investors insights into the US economy. Economists consider the US housing market a litmus test of the economy. Upward trends in building permits and housing starts could indicate rising demand for new homes, signaling a robust economy.
While the stats will draw interest, the focus will remain on the post-European close FOMC interest rate decision, projections, and press conference.
A 50-basis point Fed rate cut and optimism toward a soft US economic landing could push the DAX toward 19,000 on Thursday. Conversely, a 50-basis point Fed rate cut and warnings of a hard landing could drag the DAX toward 18,000.
Near-Term Outlook
Near-term DAX trends will hinge on Eurozone inflation numbers and the Fed interest rate decision. Softer Eurozone inflation could raise bets on a Q4 2024 ECB rate cut, boosting demand for DAX-listed stocks. However, the Fed interest rate decision and projections will likely impact the DAX more.
In the futures markets, the DAX was down 40 points, while the Nasdaq mini was up by 3 points. Investor caution may grip the DAX, with the FOMC interest rate decision due after the European closing bell.
Investors should stay alert to central bank chatter and economic indicators. Stay informed with our latest news and analysis to manage your risks effectively.
DAX Technical Indicators
Daily Chart
The DAX remains above the 50-day and 200-day EMAs, affirming bullish price signals.
A breakout from the 18,750 level could support a move to the all-time high at 18,991. Furthermore, a break above 18,991 may give the bulls a run at 19,200.
Eurozone inflation, central bank commentary, and sentiment toward the Fed rate path require investor consideration.
Conversely, a drop below 18,500 may signal a fall toward the 50-day EMA. A fall through the 50-day EMA could give the bears a run at 18,000.
The 14-day RSI at 57.66 indicates a climb to the all-time high before entering overbought territory.
About the Author
Bob Masonauthor
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.
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