Dax Index News: Five-Day Losing Streak – Can US Inflation Data Reverse the Slide?

DAX Suffers Five-Day Losing Streak – How Will the DAX React to US Data?

On Thursday, December 19, the DAX slid by 1.35%, following Wednesday’s 0.02% slip to close at 19,970.

The DAX’s five-day tumble reflects growing investor unease, with markets reeling from the Fed’s latest maneuvers. This relentless slide echoes the mounting uncertainty weighing on global economies.

Tech Stocks Slide With Autos Struggling

On Wednesday, the Fed projected fewer rate cuts in 2025, triggering a US market sell-off. The DAX played catch-up on Thursday, with Infineon Technologies sliding 5.40%.

While the losses were broader-based, capital-intensive stocks faced intense selling pressure. Siemens AG and Siemens Energy declined by 2.71% and 2.38%, respectively.

Auto stocks also trended lower, with BMW falling 0.92%.

Mixed Signals from German Consumer Sentiment

Germany’s GfK Consumer Climate Indicator increased from -23.3 for December to -22.1 for January, signaling an improving consumer sentiment.

• Income expectations and the willingness to buy increased in December, signaling a marginally brighter economic outlook.
• Private consumption contributes over 50% to Germany’s GDP, a significant component of the German economy.

However, higher spending could fuel demand-driven inflation, which may leave the ECB in a more cautious stance on rate cuts.

How Did the Experts Assess Consumer Sentiment Trends and Geman Economy?

Rolf Burkl, consumer expert at NIM, commented on the December Report, stating,

“After the slump in the previous month, consumer sentiment has improved slightly, but only partially offsetting the previous declines. At -21.3 points, the consumer climate remains at a very low level. Looking back, we have just seen stagnation since mid-2024.”

Burkl concluded,

“A sustained recovery in consumer sentiment is not yet in sight, as consumer uncertainty is still too high. The main reason is high food and energy prices. In addition, concerns about job security are growing in many sectors.”

US Data Intensifies Pressure on DAX

US jobless claims fell from 242k (week ending December 7) to 220k (week ending December 14), underscoring a resilient labor market. Tight labor market conditions could drive wage growth, fueling consumer spending and demand-driven inflation. The data supported the Fed’s less dovish rate path outlook for 2025.

US GDP numbers also bolstered expectations of fewer Fed rate cuts in 2025. The US economy expanded by 3.1% quarter-on-quarter in Q3 2024, up from a preliminary 3.0%.

Thursday’s data contributed to the DAX’s losses.

US Markets Tread Water After Wednesday’s Sell-Off

US equity markets failed to reverse Wednesday’s losses as investors digested the latest labor market data. The Nasdaq Composite Index and the S&P 500 declined by 0.10% and 0.09%, respectively. However, the Dow rose 0.04%, ending its ten-day losing streak.

In the bond markets, upbeat US data drove 10-year US Treasury yields to 4.594%, the highest level since May 30.

How Will the US Personal Income and Outlays Report Impact the DAX?

In Friday’s US session, the crucial Personal Income and Outlays Report will influence demand for DAX-listed stocks. Economists forecast the Core PCE Price Index to increase by 2.9% year-on-year in November, up from 2.8% in October. Higher inflation could strengthen expectations of fewer Fed rate cuts, dampening risk sentiment.

Better-than-expected inflation data could pull the DAX toward the 19,675 support level and 50-day EMA. Conversely, softer inflation may drive the DAX through 20,000, bringing the 20,150 level into play.

Beyond the inflation data, investors should also consider personal income and spending trends. Rising trends would signal a pickup in demand-driven inflation.

Other stats include finalized consumer sentiment data. However, these will likely play second fiddle to the Personal Income and Outlays Report.

Near-Term Outlook

The DAX’s near-term trends depend on the Personal Income and Outlays Report and central bank commentary. Elevated US inflation data and ECB hesitancy on rate cuts could pressure the DAX toward 19,500. Conversely, softer inflation and ECB support for multiple rate cuts could drive the DAX toward 20,150.

Beyond the data, US tariff-related developments, particularly regarding automotive and industrial goods, remain a key risk factor.

With inflation looming large and global trade tensions simmering, the path forward for the DAX feels precarious, leaving investors bracing for turbulence ahead.

As of Friday morning, futures pointed to another sharp sell-off. DAX futures were down 177 points, while the Nasdaq-mini futures fell by 124 points.

DAX Technical Indicators

Daily Chart

Despite Thursday’s sell-off, the DAX remains above the 50-day and 200-day EMAs, confirming bullish price trends.

If the DAX returns to 20,150, it could signal a move toward 20,350 next. A breakout from 20,350 could enable the bulls to target Friday’s record high of 20,553.

US economic data and central bank commentary will influence DAX trends.

Conversely, a DAX break below 19,750 could bring the 19,675 support level and 50-day EMA into play. Buying pressure may intensify at the 19,657 support level. The 50-day EMA is confluent with it.

With the 14-day RSI at 52.21, the DAX could return to the record high of 20,523 before entering overbought territory.

Final Thoughts

The DAX remains highly sensitive to global drivers, including US economic data, US tariff concerns, and ECB forward guidance. Investors should expect further volatility following the Fed’s cut-and-hold maneuver. US tariffs on German goods may impact company earnings and the DAX. Furthermore, US tariffs on China could increase competition, further affecting demand for German goods.

Explore in-depth forecasts and actionable strategies here for navigating DAX volatility.