DAX Index News: German Factory Orders and US Data to Test DAX Market Sentiment

Market Overview

On Wednesday, September 4, the DAX declined by 0.83%, after a 0.97% loss on the previous day, closing at 18,592.

Key DAX Market Movers

Infineon Technologies suffered heavy losses for the second consecutive session, sliding by 3.84% amid uncertainty about the US economy. SAP ended the session down 2.33%.

Auto stocks also faced headwinds over demand concerns. Daimler Truck Holding declined by 3.29%, while Mercedes Benz Group and BMW saw declines of 1.66% and 1.25%, respectively. Volkswagen fell by 1.25%.

German Services Sector and Recession Risks

On Wednesday, September 4, Germany’s HCOB Services PMI declined from 52.5 in July to 51.2 in August, raising recession concerns. Notably, the rate of job shedding was the highest since June 2020, with cost inflation pressures easing.

Expert Views on Germany’s Services Sector

Hamburg Commercial Bank Chief Economist Dr. Cyrus de la Rubia commented on the August survey, stating,

“Without growth in the private service sector, Germany’s economic picture would be pretty grim. This sector, which accounts for just over 40% of the economy, has been a major stabilizing force, offsetting the recessions in manufacturing and construction. But that support is starting to weaken. Growth slowed again in August.”

German Economic Calendar

On Thursday, August 5, German factory orders will draw investor interest. Economists expect factory orders to fall by 1.5% in July, following a 3.9% increase in June.

A larger-than-expected fall in factory orders would align with recent private sector PMI data, signaling a waning demand environment. Signs of a weakening demand environment may impact buyer demand for DAX-listed stocks.

US Labor Market Weakness and the Fed

On Wednesday, the JOLTs Job Openings Report fueled concerns about a hard landing. Job openings declined from 7.910 million in June to 7.673 in July. Notably, the weaker numbers came as the Fed increased scrutiny of labor market conditions.

FOMC voting member Raphael Bostic fueled bets on a Fed rate cut, warning that interest rates should not stay high for too much longer or it may impact the labor market.

Expert Views on the US Labor Market

Arch Capital Global Chief Economist Parker Ross reacted to the labor market data, stating,

“Altogether, today’s JOLTS report doesn’t provide a lot of new information and merely confirms the deterioration we’ve seen already in the July jobs report and other labor market indicators.”

US Market Trends

On Wednesday, September 4, the Nasdaq Composite Index and the S&P 500 declined by 0.30% and 0.16%, respectively, while the Dow advanced by 0.09%.

Rising bets on a 50-basis point September Fed rate cut countered investor fears of a US recession. According to the CME FedWatch Tool, the probability of a 50-basis point Fed rate cut rose from 38.0% on September 3 to 45.0% on September 4.

US Economic Calendar

On Thursday, September 5, the US labor market and services sector will be in focus. These reports could be crucial amidst rising concerns about the US labor market and economic outlook.

ADP Employment and Initial Jobless Claims

Economists expect the ADP to report an increase in employment of 145k in August, up from 122k in July.

Furthermore, economists forecast initial jobless claims will slip from 231k in the week ending August 24 to 230k in the week ending August 31.

Better-than-expected US labor market data may ease fears about a US economic recession. A deteriorating US labor market may impact wage growth, consumer confidence, and spending. A pullback in consumer spending may affect the US economy as it contributes over 60% to GDP.

US Services PMI Outlook

Beyond the labor market, service sector data will also give crucial insights into the US economy. Economists predict the ISM Services PMI will slip from 51.4 in July to 51.1 in August. A lower-than-expected PMI could retrigger investor fears of a hard landing as it accounts for over 70% of the US economy.

However, investors should consider subcomponents, including job creation and input prices. Downward trends in employment and wages could send recession signals, possibly impacting demand for DAX-listed stocks.

Near-Term Outlook

Near-term DAX trends will likely hinge on the US labor market data and the US Services PMI. Weaker numbers could fuel economic recession fears, possibly pulling the DAX down toward 18,000. Conversely, positive data and bets on a September Fed rate cut could push the DAX toward,19,000.

However, economic data from Germany also require consideration. Weaker-than-expected factory orders may test market risk sentiment.

In the futures markets, the DAX and the Nasdaq mini were down by 46 and 49 points, respectively.

Investors should stay alert with central bank speakers, and economic indicators likely influence risk sentiment. Monitor the news wires, the economic calendar, and expert commentary to manage trading strategies.

Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

The DAX hovered above the 50-day and 200-day EMAs, confirming bullish price trends.

A return to 18,750 could signal a move toward Tuesday’s high of 18,991. Furthermore, a break above 18,991 could bring 19,250 into play.

German factory orders, US labor market data, US Services PMIs, and central bank commentary require consideration.

Conversely, a break below 18,500 could give the bears a run at the 50-day EMA. A fall through the 50-day EMA could bring 18,250 into play.

The 14-day RSI at 54.84 indicates a return to Tuesday’s high of 18,991 before entering overbought territory.