DAX Index News: Rally Continues as Investors Eye US Leading Index Data

Market Overview

On Friday, August 16, the DAX advanced by 0.77% after a 1.66% rally on Thursday, closing at 18,322. Significantly, the DAX extended its winning streak to nine sessions.

Friday: DAX Market Movers

• Bayer surged 10.35% to top the DAX. Investors reacted positively to a favorable court ruling in the US regarding its Roundup weed killer.
• Auto stocks trended higher, with Mercedes-Benz Group gaining 0.84%, while Daimler Truck Holding advanced by 0.74%. Expectations of  Fed rate cuts and a soft US economic landing eased fears of a waning demand environment.

US Consumer Sentiment Boost Soft Landing Hopes

On Friday, August 16, US consumer sentiment figures bolstered expectations of a soft US economic landing (avoiding a recession). The threat of a US economic recession (hard landing) could adversely impact riskier assets.

The Michigan Consumer Sentiment Index increased from 66.4 in July to 67.8 in August. Upward trends in consumer sentiment could drive consumer spending, which is crucial as private consumption contributes over 60% to the US economy.

Hopes for a soft landing coincided with expectations of multiple 2024 Fed rate cuts. Lower borrowing costs and a favorable economic environment could improve company profits, possibly increasing demand for stocks.

US Market Trends

On Friday, August 16, the US equity markets ended the week on a positive note. The Nasdaq Composite Index and the S&P 500 gained 0.21% and 0.20%, respectively, with the Dow rising by 0.24%.

US Economic Calendar

On Monday, August 19, the US Conference Board Leading Index may influence market risk sentiment. Economists expect a 0.3% fall in July after declining by 0.2% in June. The Index provides much-needed insights into the US economic outlook.

A larger-than-expected fall could test investor confidence in a soft US economic landing, affecting demand for DAX-listed stocks.

Investors should also consider FOMC member commentary as the Jackson Hole Symposium looms. FOMC voting member Christopher Waller is on the calendar to speak. Waller said, in July, that a rate cut could be imminent if inflation trends remained favorable. A shift in sentiment toward the Fed rate path and views on the US economy could influence the appetite for DAX-listed stocks.

Expert Views on the US economy

The Conference Board, Business Cycles Indicators, Senior Manager Justyna Zabinksa-La Monica commented on the June report, stating,

“June’s data suggest that economic activity is likely to continue to lose momentum in the months ahead. We currently forecast that cooling consumer spending will push US GDP growth down to around 1 percent (annualized) in Q3 of this year.”

Near-Term Outlook

Near-term DAX trends will hinge on services PMI numbers on Thursday and central bank commentary. Weaker-than-expected services PMI numbers and support for September rate cuts from the ECB and the Fed could fuel buyer demand for DAX-listed stocks.

However, the US Services PMI could reignite fears of a hard landing if it drops below 50. Fears of a hard landing may overshadow rate cut optimism, possibly impacting riskier assets.

In the futures markets, the DAX was down by 11 points, while the Nasdaq Mini increased by 37 points.

Investors should stay alert with the ECB and the Fed in focus. Monitor the news wires, the economic calendar, and expert commentary to manage trading strategies.

Stay informed with our latest news and analysis to manage your risks effectively.

DAX Technical Indicators

Daily Chart

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

A return to 18,500 could support a move toward 18,750, A breakout from 18,750 might give bulls a run at the all-time high of 18,893.

US economic data and central bank chatter require consideration on Monday.

Conversely, a DAX drop below the 50-day EMA could signal a fall toward 18,000. A fall through 18,000 would bring the 17,615 support level into play.

The 14-day RSI at 56.84 suggests a return to the all-time high of 18,893 before entering overbought territory.