Dax Index News: Market Awaits Industrial Production Data as DAX Faces Downside Risks

Market Overview

On Monday, October 7, the DAX slipped by 0.09% after gaining 0.55% on Friday to close at 19,104.

Economic indicators from Germany contributed to the Monday loss.

Auto Stocks Cushion the Downside as EU Eyes Tariffs on China’s Electric Vehicles

Auto stocks extended their gains from Friday as the EU eyes tariffs on China’s electric vehicles (EV). Mercedes-Benz Group and Porsche advanced by 0.61% and 0.55%, respectively.

However, concerns about the impact of Hurricane Milton affected insurance stocks. Munich Re Group slid by 2.69%, while Hanover Re declined by 2.63%, also weighing on the DAX.

Middle East Jitters Linger

On Monday, concerns about the Middle East conflict lingered. Israel and the US were reportedly in discussions about targeting Iranian oil facilities after Iran’s recent missile attack. Crude oil prices rallied over fears of supply disruption, highlighting investor unease toward the intensifying situation.

German Factory Orders Tumble

On Monday, factory orders from Germany reinforced expectations of a German economic contraction in 2024. Orders slid by 5.8% in August, with domestic orders tumbling 10.9%.

The August figures followed September’s private sector PMIs that highlighted a slump in new orders, signaling a gloomy end to 2024. On Monday, Germany’s economic ministry projected the German economy will contract by 0.2% in 2024.

Expert Views on the German Economy

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

“What is particularly troubling, looking back over the last 30 years, is how long this slump in export orders has dragged on – it is unprecedented. We attribute this to the “China shock.” Many companies, especially in the automotive and mechanical engineering sectors, have not yet found convincing answers to the sudden intensification of competition.”

German Industrial Production in Focus

On Tuesday, October 8, Germany’s manufacturing will face more scrutiny. Economists forecast industrial production to increase by 0.8% in August after sliding by 2.4% in July. An unexpected fall in production could send more warning signs.

However, the numbers are unlikely to have an impact on overall sentiment. Factory orders increased in July, which could boost industrial production in August. Nevertheless, the latest factory orders suggest any upswing in production could be temporary.

US Market Trends

On Monday, October 7, the US equity markets kickstarted the week in negative territory. The Nasdaq Composite Index declined by 1.18%, while the Dow and the S&P 500 saw losses of 0.94% and 0.96%, respectively. Concerns about the Middle East conflict and shifting sentiment toward the Fed rate path dampened demand for riskier assets.

US Economic Calendar: RCM/TIPP Economic Optimism Index and the Fed

On Tuesday, the RCM/TIPP Economic Optimism Index may further influence sentiment toward the Fed rate path. Economists forecast the Index to increase from 46.1 in September to 47.2 in October. Upbeat numbers could reduce bets on multiple Q4 2024 Fed rate cuts. Improving consumer optimism could boost private consumption, which accounts for over 60% of the US GDP.

Additionally, FOMC member speeches need monitoring. Their views on the latest US Jobs Report and insights into the timing of Fed rate cuts could influence demand for DAX-listed stocks.

Hawkish comments could send the DAX below 19,000. Conversely, favorable views about the US economy and calls for multiple Q4 2024 Fed rate cuts may drive the DAX toward 19,250.

Near-Term Outlook

In the short term, DAX trends will likely depend on updates from the Middle East, central banks, and Thursday’s US CPI Report. Weaker US inflation figures and support for multiple Q4 2024 ECB and Fed rate cuts could drive demand for DAX-listed stocks. Conversely, hawkish central bank comments or higher US inflation may dampen market risk appetite.

The futures markets signal a mixed start to the Tuesday session, with the DAX down 138 points, while the Nasdaq mini was up by 3 points. A lack of fresh stimulus measures from Beijing likely affected the appetite for riskier assets.

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. Risk aversion may send the DAX drop toward 18,750. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

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

A return to 19,250 could give the bull a run at the all-time high of 19,492. Furthermore, a break above 19,429 may signal a move toward 19,750.

Investors should focus on the Middle East, Euro area economic data, and central bank commentary, which may influence near-term market sentiment.

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

The 14-day RSI at 56.64 indicates a climb to 19,500 before entering overbought territory.