DAX Index News: German PMI Fuels ECB Rate Cut Bets – Market Forecast and Outlook

Market Overview

On Monday, September 23, the DAX advanced by 0.68%, partially reversing a 1.49% loss from the previous session to close at 18,847.

Key DAX Market Movers

Online retailer Zalando SE rallied 3.17%, with Siemens Energy AG gaining 2.88% on rising bets on a Q4 2024 ECB rate cut.

Expectations of lower borrowing costs also drove demand for auto stocks. BMW advanced by 2.44%, with Volkswagen and Mercedes-Benz Group gaining 2.14% and 2.00%, respectively.

However, Commerzbank tumbled 5.68% on news of the German government stating its lack of support for a UniCredit bid.

German Private Sector PMIs Fuel ECB Rate Cut Bets

On Monday, September 23, private sector PMI numbers from Germany fueled speculation about a Q4 2024 ECB rate cut.

The HCOB Manufacturing PMI declined from 42.4 in August to a 12-month low of 40.3 in September, indicating weakening demand. Furthermore, the HCOB Services PMI dipped from 51.2 in August to a six-month low of 50.6 in September, painting a gloomy picture of the German economy.

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

“The slump in manufacturing is beginning to spill over into Germany’s otherwise resilient services sector. Activity growth among service providers has slowed for four consecutive months, edging closer to stagnation. In response to the weakening demand, companies are continuing to reduce their workforce. The outlook for the services sector does not look pretty.”

German Ifo Business Climate in Focus

On Tuesday, September 24, Germany’s Ifo Business Climate Index will draw investor interest. Economists expect the Index to fall from 86.6 in August to 86.1 in September. A larger-than-expected decline would align with the recent private sector PMI survey, where optimism across the manufacturing sector plummeted into the steepest pessimism in 12 months.

A slump in business sentiment could further pressure the ECB to consider rate cuts to bolster the German and Eurozone economies. Speculation about a Q4 2024 ECB rate cut may push the DAX toward 19,000.

Expert Views on the Euro Area Economy and the ECB Rate Path

Oxford Economics Macro Specialist for Europe Daniel Kral commented on the September PMI for the Eurozone, stating,

“Eurozone composite PMI dropped to contraction territory in September as the one-off boost from Paris Olympics faded. Downside risks to growth in Europe are mounting on top of an imminent fiscal consolidation, while the ECB is again behind the curve.”

US Services Sector Activity Slows

On Monday, the crucial US S&P Global Services PMI further eased fears of a hard US economic landing. The Services PMI fell modestly from 55.7 in August to 55.4 in September. The services sector accounts for almost 80% of the US economy, giving the services PMI more weight than manufacturing sector-related data.

US Market Trends

On Monday, September 23, the US equity markets kickstarted the week positively. The S&P 500 advanced by 0.28%, while the Dow and the Nasdaq Composite Index saw gains of 0.15% and 0.14%, respectively.

US Economic Calendar: Consumer Confidence in Focus

On Tuesday, US consumer confidence will be in focus. Economists predict the CB Consumer Confidence Index will increase from 103.3 in August to 103.8 in September.

Better-than-expected figures could raise bets on a soft US economic landing and push the DAX toward 19,000. Upward trends in consumer confidence may boost private consumption, which contributes over 60% to the US GDP. Conversely, a drop below 100 could reignite fears of a hard landing, possibly dragging the DAX toward 18,500.

Near-Term Outlook

Near-term DAX trends will hinge on the US consumer confidence figures and central bank chatter. Upbeat data from the US and support for Q4 2024 ECB and Fed rate cuts could push the DAX toward 19,000. Conversely, a slide in the CB Consumer Confidence Index could reignite fears of a hard US landing, possibly sending the DAX toward 18,500.

However, caution remains as futures markets signal a mixed session, with DAX up 28 points, while the Nasdaq mini was down by 25 points.

Investors should stay alert to central bank chatter and economic indicators. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

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

A breakout from 18,850 would support a move toward the September 19 all-time high of 19,045. Furthermore, a return to 19,045 could give the bulls a run at 19,200.

US consumer confidence, German business sentiment, and central bank commentary require investor consideration.

Conversely, a fall through 18,750 could bring the 50-day EMA into play.

The 14-day RSI at 57.76 indicates a climb to 19,045 before entering overbought territory.