Dax Index News: Eyes on ECB Rate Cut Bets as German Inflation Data Looms Today

DAX Advances as Corporate Earnings Counter Trump and China Woes

On Monday, November 11, the DAX advanced by 1.21%, reversing a 0.76% loss from the previous session to close at 19,449. Corporate earnings boosted the DAX, countering concerns about US tariffs and weak demand signals from China.

Major Stock Movers

Continental AG surged 10.62% as investors reacted to its earnings results. Rheinmetall AG was also among the front-runners, rallying 3.48%. Demand for military stocks jumped on expectations the EU would increase spending on defense after Trump’s victory.

Reinsurers made solid gains, with Hannover Re advancing by 3.06% after raising its 2024 profit target, while Munich Re rose by 1.74%.

However, the auto sector had a mixed session after heavy losses on Friday. BMW and Volkswagen saw gains of 0.38% and 0.48%, respectively, while Porsche declined by 0.16%. Daimler Truck Holding and Mercedes Benz Group ended the session in negative territory. Trump’s tariff plans on EU goods and weak demand signals from China continued to pose headwinds for auto stocks.

China Consumer and Producer Prices Signal Weak Demand for German Goods

China’s inflation figures signaled weaker domestic demand, raising concerns for German exporters. Deflationary pressures accelerated, coming at a bad time for countries appearing on Trump’s tariff list.

Chinese producer prices declined by 2.9% year-on-year in October, following a 2.8% drop in September. Typically, producers reduce prices as demand falls, passing savings on to consumers.

German Inflation and Economic Sentiment

German economic sentiment and inflation figures, due Tuesday, November 12, will likely influence DAX trends. Economists expect the ZEW Economic Sentiment Index to slip from 13.1 in October to 12.8 in November. Weaker figures could reduce demand for DAX-listed stocks if analysts highlight the potential impacts of Trump’s policies on the German economy.

Finalized German inflation figures also need consideration as investors speculate about a December ECB rate cut.

Germany’s annual inflation increased from 1.6% in September to 2.0% in October. An upward revision could reduce investor bets on a 50-basis point December ECB rate cut, potentially pulling the DAX below 19,350. Conversely, a softer inflation print might reinforce 50-basis point ECB rate cut bets, supporting a DAX move toward the all-time high of 19,675.

Revisions to the inflation figures will likely impact demand for DAX-listed stocks more than the economic sentiment data.

Expert Views on Trump Tariffs on EU Imported Goods

Natixis Asia Pacific Chief Economist Alicia Garcia Herrero recently remarked on the threat of US tariffs on EU goods, stating,

“But direct tariffs on imported goods from Europe are only part of the story. Trump tariffs will be doubly painful, if not more, not only because of the direct effect, but through the indirect effect, through China diverting its exports towards Europe.”

Trump has threatened 60% tariffs on Chinese goods, compared to 25% for the EU.

US Equity Markets Extend Gains as Trump Trades Power Ahead

On Monday, November 11, US equity markets extended their gains from Friday. The Dow advanced by 0.69%, while the Nasdaq Composite Index and the S&P 500 gained 0.06% and 0.10%, respectively.

The US markets hit record highs on Monday as Trump trades continued to fuel demand for riskier assets. Notably, Tesla Inc. (TSLA) rallied 8.96% on expectations of Elon Musk joining the US administration. Meanwhile, hopes of Trump deregulating the US banking sector sent US bank stocks higher. Goldman Sachs (GS) advanced by 2.22%, while Morgan Stanley (MS) gained 3.08%.

US Consumer Inflation Expectations and Fed Speakers in Focus

On Tuesday, November 12, US consumer inflation expectation trends could influence demand for riskier assets.

Economists predict consumer inflation expectations will hold steady at 3.0% in October. Softer-than-expected figures could bolster bets on a December Fed rate cut, lifting global equities. Conversely, higher inflation expectations might dampen demand for rate-sensitive sectors, including tech.

Beyond the data, FOMC member commentary could also influence sentiment toward the Fed rate path. FOMC members Christopher Waller and Thomas Barkin are on the calendar to speak.

Near-Term Outlook

In the near term, DAX trends will likely hinge on German economic data, tariff-related news, and Beijing’s stimulus plans. Beijing hints of consumer demand-focused stimulus and Fed signals for a December Fed rate cut could boost the DAX. However, concerns about China’s economy and Trump’s tariff threats remain DAX headwinds.

As of Tuesday morning, futures suggest a positive opening. DAX futures declined by 55 points, while the Nasdaq mini futures were up 14 points.

Investors should eye economic releases, Trump-related updates, central bank comments, and potential Beijing stimulus to manage risks effectively.

DAX Technical Indicators

Daily Chart

After Monday’s recovery, the DAX holds above the 50-day and 200-day EMAs, confirming bullish price trends.

A DAX return to 19,500 could enable the bulls to target the all-time high of 19,675. Furthermore, a breakout from 19,675 may support a move toward 19,750.

German economic data, central bank commentary, China, and tariff-related news need consideration.

Conversely, a DAX break below 19,350 would bring the 50-day EMA and 19,000 into play. A fall through 19,000 could signal a drop toward the 18,750 level.

With the 14-day RSI at 55.18, the DAX may break above 19,675 before entering overbought territory.