Dax Index News: German Inflation and US Producer Prices Key for Today’s Market Outlook

DAX

On Thursday, October 10, the DAX declined by 0.23%, partially reversing a 0.99% gain from Wednesday to close at 19,211.

Market sentiment deteriorated following September’s US CPI Report, which impacted demand for DAX-listed stocks.

Autos Reverse Gains

Continental AG trimmed its gains from Wednesday, falling by 0.60%, while Daimler Truck Holding and BMW saw losses of 0.65% and 0.73%, respectively. Demand concerns resurfaced as investors considered Fed monetary policy and China’s recent policy measures.

However, military stocks were among the worst performers across the European markets, with Rheinmetall AG sliding by 3.68%.

German Retail Sales Fail to Impress

On Thursday, German retail sales figures failed to ease concerns about the German economy. Retail sales rose by 1.6% in August after an increase of 1.5% in July. While contributing over 50% to German GDP, recent trade, private sector PMI, and factory orders numbers have aligned with expectations of a 2024 economic contraction.

Expert Views on German Retail Sales

Oxford Economics Chief Germany Economist and ECB Commentator Oliver Rakau commented on the August retail sales report, stating,

“German retail sales data hasn’t been published in a while, but at least Jul/Aug figures are relatively positive, up >1% on Q2, so it would need a very bad September to turn that around. But with industry headed for a similar fall odds of a negative Q3 GDP are reduced not gone.”

German Inflation and ECB Rate Cut Bets

On Friday, October 11, German inflation numbers could be crucial for investors betting on multiple Q4 2024 ECB rate cuts. According to the preliminary report, the annual inflation rate eased from 1.9% in August to 1.6% in September. Softer inflation raised bets on an October ECB rate cut.

A downward revision could fuel expectations of multiple Q4 2024 ECB rate cuts, possibly sending the DAX toward 19,500.

US CPI Report Impacts Market Risk Sentiment

On Thursday, the heavily anticipated US CPI Report dampened demand for DAX-listed stocks. The US core inflation rate rose from 3.2% in August to 3.3% in September, creating Fed policy uncertainty.

However, an unexpected spike in US jobless claims, likely attributable to the hurricane season, limited the impact of the CPI Report on the markets. Initial jobless claims increased from 225k (week ending September 28) to 258k (week ending October 5).

US Market Trends

On Thursday, the US Equity Markets ended the session with modest losses as investors considered the mixed economic data. The Dow fell by 0.21%, while the Nasdaq Composite Index and the S&P 500 declined by 0.14% and 0.05%, respectively.

US Producer Prices and Consumer Sentiment in Focus

On Friday, US producer prices and consumer sentiment figures could influence sentiment toward the Fed rate path. Economists expect producer prices to increase by 1.6% year-on-year in September after rising by 1.7% in August. Following Thursday’s US CPI Report, a higher print could impact bets on a November Fed rate cut and demand for riskier assets.

However, an unexpected fall in the Michigan Consumer Sentiment Index could overshadow the PPI Report. Waning consumer confidence could dampen spending and inflation, supporting a more dovish Fed rate path.

Better-than-expected data could push the DAX below 19,000, while weaker producer prices and modestly higher consumer sentiment numbers could drive the DAX toward 19,350.

Near-Term Outlook

In the short term, DAX trends will likely hinge on central bank commentary, Germany’s inflation numbers, and US data. Softer US inflation and consumer confidence could boost bets on multiple Q4 2024 Fed rate cuts. Conversely, hotter US producer prices could impact buyer appetite for DAX-listed stocks.

The futures markets signal a positive start to the Friday session, with the DAX and Nasdaq mini up 43 and 28 points, respectively.

Investors should stay alert to updates on the Middle East conflict, central bank chatter, and economic indicators. An escalation in the Middle East conflict could fuel a flight to safety and a DAX drop below 18,750. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

The DAX remains comfortably above the 50-day and 200-day EMAs, affirming bullish price signals.

A break above 19,350 could give the bulls a run at the all-time high of 19,492. Furthermore, a return to 19,492 may signal a move toward 19,750.

Investors should consider updates from the Middle East, Euro area economic data, the US economic calendar, and central bank commentary, which may influence near-term market sentiment.

Conversely, a drop below 19,000 could indicate a fall toward the 50-day EMA.

The 14-day RSI at 58.52 suggests a move to 19,500 before entering overbought territory.