Dax Index News: Record Highs Despite Grim Factory Order Numbers

DAX Hits Record High Amid Softer US Service Sector Activity

Can the DAX break above the 20,500 barrier, or will headwinds weigh?

On Wednesday, December 4, the DAX rallied 1.08%, following Tuesday’s 0.42% gain, closing at 20,232. Significantly, the DAX climbed to a record high of 20,261.

Expectations for multiple ECB rate cuts to bolster the Euro area economy drove demand for DAX-listed stocks. Supporting the optimism toward the ECB rate path, the German Economic Institute projected Germany’s economy would expand by 0.1% in 2025.

Weaker-than-expected US services sector data supported bets on a December Fed rate cut, sending the DAX to its record high.

Despite the DAX’s upward trend, uncertainty looms. Can the DAX maintain its bullish trend, or will Trump tariff threats impact investor confidence?

Sector Highlights: Autos and Retail Shine

Online retailer Zalando surged by 8.21 on Wednesday, driven by Baader Helvea, which upgraded Hugo Boss’s rating from add to buy. Adidas advanced by 0.55%.

Auto stocks reversed their losses from Tuesday on reports of Apple’s CFO becoming the new CEO of Stellantis, the French-Italian car manufacturer. BMW and Mercedes Benz Group posted gains of 2.28% and 2.00%, respectively. Porsche and Volkswagen also moved higher.

Euro Area Services PMIs: Outlook Remains Grim

On Wednesday, Germany’s finalized services PMI numbers highlighted the country’s economic challenges. The Services PMI dropped from 51.6 in October to 49.3 in November, down from a preliminary 49.4.

Waning demand dragged employment lower for the fifth consecutive month. However, input price inflation rose to a four-month high on higher wages, pushing output prices upwards.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Bank, remarked on the November data, saying,

“Hopes that the service sector could keep the German economy afloat in the long run pretty much vanished in November. After eight months of growth, the PMI for services dipped into negative territory. This means it can’t make up for the recession in the industrial sector anymore, and the economy might stagnate or even contract in the fourth quarter.”

German Industrial Sector Under Scrutiny

On Thursday, December 5, Germany’s industrial sector was back under the spotlight. Factory orders slid by 1.5% in October, following a 4.2% jump in September.

The slump in production aligned with the weak manufacturing sector PMI data that underscored Germany’s industrial sector woes. Significantly, the weak economic data could fuel bets on multiple ECB rate cuts, potentially driving demand for DAX-listed stocks.

Lower interest rates and a weaker EUR/USD may increase demand for German goods, companies’ overseas earnings, and stock prices.

US Services PMI Bolsters December Fed Rate Cut Bets

The ISM Services PMI fell from 56.0 in October to 52.1 in November, solidifying market bets on a December Fed rate cut. The services sector accounts for around 80% of the US GDP. Weaker growth prospects and looser labor market conditions may also raise bets on a Q1 2025 Fed rate cut. A more dovish Fed rate path could drive demand for riskier assets.

US labor market data had a muted impact on the DAX. The ADP reported employment rising by 146k in November, down from 184k in October.

According to the CME FedWatch Tool, the chances of a December Fed rate cut increased from 72.9% on December 3 to 74.0% on December 4.

US Market Trends and Fed Chair Powell

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

On Wednesday, December 4, US equity markets advanced, with the Nasdaq Composite Index rallying 1.30%. Significantly, the DAX extended its winning streak to four sessions. The Dow and the S&P 500 ended the session up 0.69% and 0.61%, respectively.

Investors reacted to the weaker services and labor market data, pulling lower 10-year US Treasury yields.

Beyond the numbers, Fed Chair Powell boosted demand for US-listed stocks, highlighting the strong US economy.

US Economic Calendar: US Jobless Claims in Focus

In Thursday’s US session, US initial jobless claims require consideration. Economists expect initial jobless claims will increase from 213k (week ending November 27) to 215k (week ending November 30). A modest increase would signal a resilient US economy, potentially improving risk sentiment.

However, an unexpected spike may reveal early cracks in the US economy, impacting market risk appetite.

 

Near-Term Outlook

In the near term, DAX movements will likely depend on central bank comments, US labor market data, and US Tariff-related news. Silence on US tariff threats and support for multiple ECB rate cuts could propel the index toward 20,150.

US tariff threats pose a headwind, possibly impacting demand for German goods. Weaker demand may weaken company earnings and stock prices.

Upbeat US labor market data and calls for caution against aggressive ECB rate cuts could drag the DAX below 20,000.

As of Thursday morning, futures signaled a positive session ahead. DAX futures were up by 1 point, while the Nasdaq mini futures advanced by 63 points.

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

DAX Technical Indicators

Daily Chart

After Wednesday’s record high, the DAX remains well above the 50-day and 200-day EMAs, confirming bullish price trends.

If the DAX breaks out from its all-time high of 20,261, it could target 21,350 next. Furthermore, a break above 20,350 may enable the bulls to target 20,500.

German factory orders, US labor market data, central bank commentary, and US tariff-related news will influence DAX trends.

Conversely, a DAX drop below 20,000 could indicate a fall toward 19,750. A fall through 19,750 may bring 19,500 into play.

With the 14-day RSI at 71.03, the DAX is in overbought territory (> 70). Selling pressure could intensify at Wednesday’s record high of 20,261.

Where do you think the DAX is heading next? Will it hold above 20,000, or are we in for a correction? Get ahead of market trends by clicking here for expert analysis and forecasts.