Dax Index News: Middle East Conflict Clouds DAX Outlook, Key Economic Data Ahead

Market Overview

On Friday, October 4, the DAX advanced by 0.55%, partially recovering a 0.78% loss from the previous session, closing at 19,121. Significantly, the DAX ended a four-day losing streak.

The robust US Jobs Report signaled a strong US labor market, driving demand for riskier assets.

Auto Stocks Rebound on EU Tariffs on China’s Electric Vehicles

Auto stocks found much-needed support as investors reacted to news of the EU pursuing tariffs on electric vehicle (EV) imports from China.

Volkswagen rallied 2.85%, while BMW and Porsche saw gains of 1.75% and 1.74%, respectively.

Risk-on sentiment drove demand for Siemens Energy AG and Infineon Technologies, which advanced by 3.39% and 2.05%, respectively.

Middle East Conflict Leaves the DAX with Weekly Losses

Despite Friday’s gains, the DAX ended the week down 1.81%. An escalation in the Middle East conflict impacted demand for DAX-listed stocks. Notably, the DAX fell for four consecutive days before the Friday session.

Expert Views on the Eurozone Economy

Commenting on the recent speech by ECB policymaker Isabel Schnabel, Oxford Economics European Macro specialist Daniel Kral stated,

“Great speech and visuals with a focus on Germany’s weakness. It’s not just high energy prices or regulation (always been the case). Put simply, China has moved up the value chain and no longer drives Germany’s export-led growth. If the US turns protectionist, Germany is cooked.”

German Factory Orders in Focus

On Monday, October 7, German factory orders could influence expectations of an October ECB rate cut. Economists forecast factory orders to slide by 2.0% in August, following a 2.9% jump in July.

A drop in factory orders would signal weakening demand, possibly pressuring the ECB to cut interest rates. Lower rates could reduce borrowing costs, possibly raising corporate profits and stock prices.

Retail sales for the Eurozone also require consideration. Economists forecast retail sales to increase by 0.2% in August, following a 0.1% rise in July. An unexpected decline in consumer spending could dampen demand-driven inflation, raising the chances of multiple Q4 2024 ECB rate cuts.

US Jobs Report Signal No Landing

Friday’s US Jobs Report fueled demand for riskier assets. An unexpected fall in the US unemployment rate and surge in nonfarm payrolls raised expectations of the US avoiding a recession.

US Market Trends

On Friday, October 4, the US equity markets rallied in response to the US Jobs Report. The Nasdaq Composite Index advanced by 1.22%, while the Dow and the S&P 500 saw gains of 0.81% and 0.90%, respectively.

US Economic Calendar: FOMC Members in Focus

On Monday, investors should monitor FOMC member speeches. Their reactions to the US Jobs Report and insights into the interest rate path could influence demand for DAX-listed stocks.

Hawkish comments may send the DAX below 19,000. Conversely, positive views on the US economy and support for multiple Q4 2024 Fed rate cuts could push the DAX toward 19,500.

Near-Term Outlook

Near-term DAX trends will likely hinge on news from the Middle East, Thursday’s US CPI Report, and central bank commentary. Softer US inflation and support for ECB and Fed rate cuts could boost demand for DAX-listed stocks. Conversely, hawkish Fed comments or higher-than-expected US inflation may reduce market risk appetite.

Beyond the economic indicators, investors should consider news updates from the Middle East. An escalation in the Middle East conflict could fuel a flight to safety.

The futures markets signal a mixed start to the Monday session, with the DAX up 60 points, while the Nasdaq mini was down by 11 points.

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

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

A break above 19,250 could signal a move toward the all-time high of 19,492. Furthermore, a return to 19,429 may give the bulls a run at 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 break below 19,000 could send the DAX toward 18,750. A fall through 18,750 could give the bears a run at the 50-day EMA.

The 14-day RSI at 57.16 suggests a move to 19,500 before entering overbought territory.