Dax Index News: Forecasts Suggest Volatile Session as Services PMI and ECB in Focus

Market Overview

On Wednesday, October 2, the DAX declined by 0.25%, following a 0.58% loss from the previous session, closing at 19,165. Significantly, the DAX extended its losing streak to three sessions.

Concerns about the recent escalation in the Middle East conflict weighed on market risk sentiment.

Auto Stocks See Three-Day Losing Streak

Auto stocks continued their downward trend on Wednesday, marking a three-day losing streak on lower profit forecasts. Shifting sentiment toward the Fed rate path and concerns about the Middle East conflict also influenced trends.

Volkswagen declined by 0.49%, while Porsche and Mercedes-Benz Group ended the session down 0.37% and 0.26%, respectively.

In contrast, the growing concerns about an Israeli response to the Iran attack fueled demand for military stocks. Rheinmetall AG advanced by 1.14%.

Eurozone Unemployment Holds Steady: ECB Rate Cut Bets Intact

The Eurozone unemployment rate remained steady at 6.4% in August, bolstering expectations of an October ECB rate cut.

Recent inflation figures for Euro Area member states and the Eurozone boosted bets on an October move. The steady unemployment rate gave the inflation figures more weighting.

Expert Views on Eurozone Inflation and the ECB Rate Path

Pictet Wealth Management Head of Macroeconomic Research, Frederik Ducrozet, referenced ECB Executive Board Member Isabel Schnabel’s latest speech,

“the ECB cannot ignore the headwinds to growth. A sustainable fall in inflation is becoming more likely. A clear signal for faster rate cuts, but monetary policy cannot resolve structural issues.”

Euro Area Services PMIs in Focus

On Thursday, October 3, Services PMIs for Germany and the Eurozone may impact demand for DAX-listed stocks.

According to the preliminary survey, the Eurozone HCOB Services PMI fell from 52.9 in August to 50.5 in September. Germany’s PMI followed a similar path, raising expectations of a German economic recession. Downward revisions to the preliminary PMIs could bolster the case for an October ECB rate cut, possibly driving demand for DAX-listed stocks.

US ADP Employment Impacts Risk Appetite

On Wednesday, the ADP reported a 143k increase in employment in September, up from 103k in August. The better-than-predicted figures reduced expectations for a 50-basis point November Fed rate cut, testing demand for riskier assets.

A tight labor market may drive wage growth and consumer spending. Upward trends in private consumption could support the US economy as it accounts for over 60% of GDP. A less dovish Fed rate path may leave borrowing costs elevated, possibly affecting corporate profits and stock prices.

US Market Trends

On Wednesday, the US equity markets ended the session with modest gains. The Nasdaq Composite Index and the Dow advanced by 0.09% and 0.08%, respectively, while the S&P 500 gained 0.01%. Concerns about the Middle East conflict and caution before Friday’s crucial US Jobs Report limited the mid-week gains.

US Economic Calendar: Services PMI and Claims in Focus

On Thursday, initial jobless claims and the ISM Services PMI may impact demand for DAX-listed stocks. Economists expect initial jobless claims to increase from 218k (week ending September 21) to 220k (week ending September 28). Furthermore, economists forecast the ISM Services PMI to increase from 51.5 in August to 51.7 in September.

A modest increase in claims and a fall in the Services PMI could refuel bets on a 50-basis point Fed rate cut, possibly pushing the DAX toward 19,500. However, a spike in claims (+250k) and an ISM PMI reading below 50 may retrigger fears of a hard US landing, possibly sending the DAX below 19,000.

Near-Term Outlook

Near-term DAX trends will likely hinge on news from the Middle East, the US economic calendar, and central bank commentary. A weaker US labor market and slowing service sector activity could boost expectations of a 50-basis point Fed rate. However, investors should be alert to dire numbers that could retrigger fears of a hard US landing.

The futures markets signal a negative start to the Thursday session, with the DAX and the Nasdaq mini down by 85 and 59 points, respectively.

Investors should stay alert to updates on the Middle East conflict, central bank chatter, and economic indicators. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

Despite the recent losses, the DAX sits well above the 50-day and 200-day EMAs, affirming bullish price signals.

A return to 19,250 could support a move toward September 27’s all-time high of 19,492. A breakout from 19,492 may give the bulls a run at 19,650.

Investors should focus on the Services PMIs, US labor market data, central bank commentary, and updates from the Middle East, which may influence near-term market sentiment.

Conversely, a drop below 19,000 may signal a fall toward 18,750. A fall through 18,750 would bring the 50-day EMA into play.

The 14-day RSI at 59.14 suggests a move to 19,500 before entering overbought territory.