Dax Index News: Record Highs Amid Rate Cut Bets – Will Inflation Change Momentum?

DAX Extends Winning Streak Amid Rate Cut Bets and Inflation Uncertainty

Can the DAX target the 21,000 barrier, or will US inflation hit momentum?

On Friday, December 6, the DAX edged up 0.13%, following Thursday’s 0.63% gain, closing at 20,385. Significantly, the DAX climbed to a record high of 20,426 while extending its winning streak to seven sessions.

Optimism over Beijing’s anticipated stimulus measures and rising expectations of a December Fed rate cut lifted investor sentiment.

French political uncertainty has failed to weigh on the DAX or the CAC, which also extended its winning streak to seven sessions on Friday.

Despite the DAX’s record high, uncertainty looms. Will the DAX sustain its bullish momentum, or could Trump’s tariff threats and upcoming economic data shift sentiment?

Sector Highlights: Autos and Tech Lead the Charge

Auto stocks led the gains on Friday, with BMW rallying 2.71%. Volkswagen rose 1.17%, with Mercedes Benz Group and Porsche also ending the session in positive territory.

Rising bets on a December Fed rate cut drove demand for tech stocks, with Infineon Technologies advancing by 1.08%. SAP gained 0.27%.

Weak German Industrial Output Fuels Rate Cut Expectations

Industrial production slid by 1.0% in October, following a 2.0% slump in September. The decline in industrial production underscored weakness in Germany’s industrial sector.

October’s data aligned with recent Manufacturing PMI figures that highlighted Germany’s economic woes. Germany’s Manufacturing PMI remained at 43 in November, deep in contraction.

Weak private sector PMI data, reflecting weak domestic and overseas demand, continued supporting multiple ECB rate cuts. Lower borrowing costs may improve company profitability, driving demand for rate-sensitive stocks.

US Jobs Report Boosts Fed Rate Cut Bets

On Friday, the US Jobs Report significantly influenced demand for DAX-listed stocks. The US unemployment rate rose to 4.2% in November, up from 4.1% in October, while the participation rate dropped to 62.5%. Lower participation and a higher unemployment rate pointed to a looser labor market, fueling speculation about a December Fed rate cut.

According to the CME FedWatch Tool, the chances of a December cut jumped from 71.8% on December 5 to 86.0% on December 6.

US Markets: Jobs Report Sends Nasdaq and S&P 500 to Record Highs

How could sentiment toward the US economy influence the global markets and near-term DAX trends?

On Friday, US equity markets had a mixed session after posting losses on Thursday. The Nasdaq Composite Index and the S&P 500 ended the day at record closing highs, gaining 0.81% and 0.25%, respectively, on Fed rate cut bets. However, the Dow extended its losses from Thursday, declining by 0.28%.

US Economic Calendar: Consumer Inflation Expectations in Focus

In the Monday US session, US consumer inflation expectations will draw interest ahead of Wednesday’s crucial US CPI Report. Economists expect consumer inflation expectations to increase from 2.9% in October to 3.0% in November.

Consumers might advance spending plans if they expect prices to move higher, potentially fueling demand-driven inflation. Rising inflation could temper investor bets on multiple Fed rate cuts, weighing on riskier assets. Conversely, softer numbers may bolster Fed rate cut bets, driving demand for DAX-listed stocks.

Near-Term Outlook

In the near term, DAX trends hinge on the US inflation data, central bank comments, and US Tariff-related news. Silence on US tariff threats and rising expectations for Fed and ECB rate cuts could drive the index toward 21,000.

Conversely, hotter-than-expected US inflation data and expectations for a less dovish ECB rate path may drag the DAX below 20,000.

The potential for US tariffs remains a headwind, possibly impacting demand for German goods. Weaker US demand amid concerns about increasing competition from China is likely to adversely affect company earnings and stock prices.

As of Monday morning, futures signaled a testy session ahead. DAX futures were down by 4 points, while the Nasdaq mini futures declined by 17 points.

China’s inflation figures set the tone for the Monday European session. The annual inflation rate unexpectedly fell from 0.3% in October to 0.2% in November, signaling weaker domestic demand.

Investors should monitor economic data, central bank commentary, and tariff-related news for trading opportunities.

DAX Technical Indicators

Daily Chart

After extending its winning streak, the DAX remains well above the 50-day and 200-day EMAs, affirming bullish price signals.

If the DAX breaks out from its all-time high of 20,426, it could target 21,750 next. Furthermore, a break above 20,750 would enable the bulls to target 21,000.

US inflation, central bank commentary, and US tariff-related updates will influence DAX trends.

Conversely, a DAX break below 20,350 could signal a drop toward 20,000. A fall through 20,000 may enable the bears to target the 19,675 support level.

With the 14-day RSI at 73.21, the DAX remains in overbought territory (> 70). Selling pressure could intensify at Friday’s all-time high of 20,426.

Where do you think the DAX is heading next? Will it break 20,500, or are we in for a correction? Explore in-depth forecasts and actionable strategies here for navigating DAX volatility.