Dax Index News: Positive Start Expected as Earnings, US Data Await – Today’s Outlook

DAX Ends the Week on a Positive Note

On Friday, October 25, the DAX gained 0.11%, after rising by 0.34% on Thursday, closing at 19,464.

Major Stock Movers: Auto Stocks Slide on Weak Earnings

The auto sector remained a focal point on Friday. Mercedes-Benz Group declined by 0.98% on disappointing earnings results. Volkswagen and BMW saw losses of 0.67% and 0.63%, respectively.

Notably, Mercedes-Benz Group reported a 64% slump in operating profit, citing rising competition in Asia and weaker demand.

Additionally, defense stock Rheinmetall AG tumbled by 3.50% over easing fears of an escalation in the Middle East conflict.

German Business Sentiment Improves in October

On Friday, the German Ifo Business Climate Index drew investor interest, increasing from 86.4 in September to 87.3 in October. The better-than-expected data and upward trends in business expectations supported buyer demand for DAX-listed stocks. The sentiment figures could signal an improving demand, a positive for German manufacturers.

Notably, the pickup in business sentiment aligned with October’s Composite PMI survey, which showed improving business sentiment.

Expert Views on the German Economy and the ECB Rate Path

Before the Ifo data, Pictet Wealth Management Head of Macroeconomic Research Fred Ducrozet commented on Germany’s economy and the ECB rate path, stating,

“The nail in the coffin? Job cuts deepen in Germany, and pricing power wanes. The ECB will be under growing pressure to move below neutral, and fast.”

US Data Fuels Soft US Landing Bets but Limits Rate Cut Expectations

On Friday, US durable goods orders, excluding transport, increased by 0.4% in September after rising 0.6% in August. The better-than-expected numbers and consumer sentiment figures raised expectations for a soft US economic landing.

However, the upbeat figures reduced investor bets on a 25-basis point December Fed rate cut, testing demand for DAX-listed stocks. According to the CME FedWatch Tool, the chances of a 25-basis point December Fed rate cut eased from 74.6% to 73.5% after Friday’s US data.

US Presidential Election and EU-US Trade Jitters

Investor jitters about a possible Donald Trump victory also affected investor appetite for DAX-listed export stocks. Markets view a Trump win as negative for US-EU relations and trade terms. Punitive US trade tariffs on EU goods could adversely affect the Eurozone economy.

According to the latest US polls, Kamala Harris leads Donald Trump by 1.4 points, down 2.8 points on September 30. A continued narrowing in the polls could further pressure DAX-listed stocks lower.

US Equity Market Overview

US equity markets had another mixed session on Friday, October 25. The Nasdaq Composite Index gained 0.56%, while the Dow and the S&P 500 saw losses of 0.61% and 0.03%, respectively.

While tech stocks trended higher before a crucial week on the earnings calendar, McDonald’s (MCD) dragged the Dow into the red. Reports of an E. coli outbreak left McDonald’s down 2.97%.

Meanwhile, 10-year US Treasury yields advanced to 4.242% on Friday, testing investor appetite for riskier assets.

Dallas Fed Manufacturing Index in Focus

In the upcoming US session, the Dallas Fed Manufacturing Index will require consideration. Economists expect the Index to increase from -9 in September to -1 in October. Upbeat numbers could further raise expectations for a soft US economic landing. However, the numbers may have a limited impact on the Fed rate path and the global equity markets.

This week, Thursday’s US Personal Income and Outlays Report and Friday’s Jobs Report will be crucial.

While investors may brush aside the data, corporate earnings will likely influence market risk sentiment. Ford Motor Co (F) is among the big names to release earnings later today.

Positive earnings could push the DAX toward 19,650. Conversely, disappointing earnings could pull the DAX below 19,350.

Near-Term Outlook

In the near term, trends will likely depend on corporate earnings, central bank commentary, and crucial economic indicators. Economic indicators, including Euro area/US inflation and the US Jobs Report, will likely influence ECB and Fed rate paths.

Falling bets on December ECB and Fed rate cuts could overshadow upbeat earnings, potentially sending the DAX toward 19,000. Conversely, market anticipation of December rate cuts and a soft US economic landing could propel the DAX to new highs.

Futures indicate a positive start to the Monday session, with the DAX and Nasdaq mini futures up by 50 and 137 points, respectively.

Investors should stay vigilant, with corporate earnings, economic data, and central bank commentary in focus. Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

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

A breakout from 19,500 could signal a move toward 19,650 and the October 17 all-time high of 19,675. Furthermore, a return to 19,675 may allow the bulls to test resistance at the 19,750 level.

Investors should consider sentiment data, corporate earnings, and central bank speeches, which may influence near-term market sentiment.

Conversely, a drop below 19,350 could bring the 50-day EMA and 19,000 into play. Buying pressure may intensify at 19,000 as the 50-day EMA is confluent with it.

The 14-day RSI at 58.80 indicates a DAX rise to 19,750 before entering overbought territory.