Dax Index News: Producer Prices and Wage Growth Influence Today’s Market Outlook

DAX Retreats Amid Geopolitical Tensions: What’s Next?

On Tuesday, November 19, the DAX declined by 0.67%, following a 0.11% loss on Monday, closing at 19,060.

Rising geopolitical tensions weighed on investor sentiment following news of Russia considering nuclear weapons.

Tech and Auto Stocks Weigh on the DAX

Geopolitical risks and US tariff jitters impacted demand for DAX-listed stocks.

Infineon Technologies declined by 2.15%. Auto stocks Daimler Truck Holding and Mercedes Benz Group posted losses of 1.23% and 1.20%, respectively. Volkswagen and Porsche also trended lower.

The potential for US tariffs on EU goods and concerns about demand from China remained headwinds for DAX-listed stocks.

However, Rheinmetall AG rallied 3.85% after announcing €20 billion sales projections for 2027.

Eurozone Inflation Rises Without Impacting Rate Cut Bets

On Tuesday, November 19, finalized Eurozone inflation figures drew interest. The annual inflation rate increased from 1.7% in September to 2.0% in October, aligned with preliminary estimates.

Despite higher inflation, expectations for a December ECB rate cut remained intact.

Bank of Italy Governor and ECB Governing Council member Fabio Panetta commented on the ECB rate path, reportedly saying,

“With inflation close to target and domestic demand stagnant, restrictive monetary conditions are no longer necessary.”

Expert Views on US Tariffs, EU Trade, and China’s Impact on Markets

On Tuesday, Daniel Kral, European macro specialist at Oxford Economics, gave more insights into the possible risks of US tariffs on China and the EU, stating,

“Hard to see how 🇪🇺 would benefit from a big 🇺🇸-🇨🇳 trade war. China’s exporters would seek to replace lost 🇺🇸 market and flood the world with goods at dumping prices, undermining 🇪🇺 companies at home and abroad – worsening 🇪🇺 trade balance & compounding the ‘China shock’ for industry.”

Kral highlighted the potential issues Germany and other manufacturing economies could face before considering US tariffs on the EU.

German Producer Prices and Eurozone Wage Growth to Spotlight the ECB

On Wednesday, November 20, German producer prices will draw interest.

Economists forecast German producer prices to fall 1.1% year-on-year in October after declining by 1.4% in September. Softer data could fuel speculation about a 50-basis point December ECB rate cut, potentially driving the DAX toward 19,350. Conversely, better-than-expected producer prices may drag the DAX below 19,000. Producer prices are a leading indicator of consumer prices.

However, Eurozone wage growth trends also need consideration. Economists predict negotiated wage growth to increase by 3.7% in Q3 2024, up from 3.55% in Q2 2024. Higher wages could fuel demand-driven inflation, potentially tempering bets on a 50-basis point ECB rate cut and pressuring the DAX.

US Housing Data Misses Estimates

In Tuesday’s US session, housing starts and building permits dropped by 3.1% and 0.6%, respectively. However, the housing data failed to spook investors as year-on-year housing completions countered the negative construction outlook.

US Equity Markets Send Mixed Signals

On Tuesday, November 19, US equity markets experienced a mixed session. The Nasdaq Composite Index and the S&P 500 advanced their gains from Monday, rising 1.04% and 0.40%, respectively. However, the Dow trended lower, falling 0.28%.

Super Micro Computer (SMCI) grabbed the headlines, jumping 31%, while Tesla (TSLA) advanced by 2.14% on expectations of easing US self-driving rules.

Fed Commentary and Geopolitics in Focus

Later in the Wednesday session, investors should monitor FOMC member commentary. FOMC member calls to delay rate hikes could impact demand for riskier assets. However, updates on the Ukraine war also need monitoring following Russia’s nuclear warning. Heightened global risks could adversely affect demand for DAX-listed stocks.

Near-Term Outlook

In the near term, DAX trends will hinge on Eurozone data, central bank commentary, and geopolitics. Hawkish Fed comments and increasing concerns about Russia’s next steps in the Ukraine war would likely weigh on riskier assets. Conversely, support for a December ECB and Fed rate cuts and easing geopolitical tensions could drive the DAX toward 19,350.

As of Wednesday morning, futures signaled a positive opening. DAX futures advanced by 49 points, while the Nasdaq mini futures gained 31 points.

Investors should closely track the Euro area economic indicators, Ukraine war-related news, and central bank commentary for market cues.

DAX Technical Indicators

Daily Chart

The DAX sits below the 50-day EMA while holding above the 200-day EMA, sending bearish near-term but bullish longer-term price trends.

A DAX break above the 50-day EMA could support a move toward 19,350. Furthermore, a breakout from 19,350 may bring 19,500 and the DAX’s all-time high of 19,675 into play.

Euro area wages, German producer prices, central bank commentary, and Ukraine war-related news require consideration.

Conversely, a DAX break below 19,000 may indicate a fall toward 18,750.

With the 14-day RSI at 45.92, the DAX could drop below 18,750 before entering oversold territory.