Dax Index News: Producer Prices and Fed Outlook Set to Influence DAX Movements

DAX Trends Higher But Misses All-Time High

On Friday, October 18, the DAX gained 0.38%, following a 0.77% rise from the previous session, closing at 19,657. While falling short of Thursday’s intraday ATH, the Index recorded a new closing high.

Auto Stocks Drive the DAX Higher

On Friday, Germany’s auto stocks were in focus. Daimler Truck Holdings led the gains, rallying 6.60%, while Porsche and Volkswagen advanced by 1.44% and 1.39%, respectively. ECB and Fed rate cut expectations and hopes for more stimulus measures from Beijing continued to boost demand for riskier assets.

Adidas advanced by 1.15%, benefitting from optimism surrounding increased demand from China, as China-exposed stocks, including luxury brand LVMH, trended higher.

Expert Commentary on the Euro Area Economy

Frederik Ducrozet, Head of Macroeconomic Research at Pictet Wealth Management, commented on the Eurozone economy, stating,

“Long-term growth expectations are down to an all-time low of less than 1.3%. Draghi: “Europe faces a choice between paralysis, exit or integration. Exit has been tried. Paralysis is becoming untenable. Integration is our only hope left.”

Upcoming Focus on German Producer Prices

On Monday, October 21, producer prices from Germany will draw interest. Economists forecast producer prices to decline by 0.8% year-on-year in September after declining by 0.8% in August.

Downward trends in producer prices may indicate weakening demand, possibly dampening inflationary pressures. A softer inflation outlook could fuel speculation about a December ECB rate cut.

Weaker-than-expected numbers could drive the DAX toward October 17’s all-time high of 19,675. Conversely, an unexpected increase may ease bets on a December ECB rate cut, possibly pulling the DAX below 19,500.

US Housing Sector Data Strengthens Fed Rate Cut Bets

On Friday, US housing sector data influenced sentiment toward the Fed rate path. Building permits slid by 2.9% in September, while housing starts declined by 0.5%.

Economists consider the housing sector to be a barometer for the US economy. Deteriorating demand may affect house prices, consumer confidence, and the broader US economy. Weaker consumer confidence could curb private consumption, which accounts for over 60% of the US GDP.

Significantly, the data increased investor expectations for a 25-basis point Fed rate cut in November, supporting demand for riskier assets.

US Equity Market Overview

On Friday, US equity markets had a positive session. The Dow edged 0.04% higher, while the Nasdaq Composite Index and the S&P 500 saw gains of 0.63% and 0.40%, respectively.

Investor expectations for a November Fed rate cut and corporate earnings contributed to the gains. Netflix (NFLX) beat Q3 earnings estimates, surging 11.09%.

US Economic Calendar: Fed Rate Path in Focus

Later in the Monday session, investors should consider Fed speakers. Their insights into the economic outlook, the labor market, inflation, and the Fed rate path may influence demand for riskier assets.

Despite rising bets on a November Fed rate cut, US economic indicators continue to signal a resilient economy. Calls to delay post-November rate cuts may send the DAX toward 19,500. Conversely, support for multiple Q4 2024 Fed rate cuts and expectations for a soft US landing could drive the DAX toward 19,750.

Near-Term Outlook

In the near term, trends will likely depend on central bank commentary and corporate earnings. Dovish ECB and Fed chatter, alongside expectations for soft Euro area and US landings, may drive demand for DAX-listed stocks.

Futures signal a testy start to the week, with the DAX futures and Nasdaq mini futures down 35 and 14 points, respectively. From the Asian session, the People’s Bank of China cut Loan Prime Rates for the third time this year to boost the economy. An improving Chinese economy could drive demand for German goods.

Investors should stay alert, with corporate earnings 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 remains well above the 50-day and 200-day EMAs, affirming bullish price signals.

A break above the October 17 all-time high of 19,675 could support a move toward 19,750. Furthermore, a breakout from 19,750 may bring the 20,000 level into play.

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

Conversely, a fall through 19,600 could allow the bears to target the 50-day EMA.

The 14-day RSI at 63.80 suggests a DAX rise to 19,750 before entering overbought territory.