Dax Index News: Retail Data and Eurozone Inflation to Dictate DAX Outlook

DAX Rallies on Inflation Cooldown: All-Time Highs in Sight?

On Thursday, November 28, the DAX advanced by 0.85%, reversing a 0.18% loss from Wednesday, closing at 19,426.

Softer-than-expected German inflation figures fueled expectations of a more dovish ECB rate path, boosting demand for DAX-listed stocks. Lower borrowing costs could improve profits for capital-intensive companies, lifting their stock prices.

Can the DAX sustain its bullish momentum, or will inflation and ECB policies derail the rally?

Airbus Leads as Autos and Banks Contribute to Gains

Airbus Group surged by 4.15% on Thursday, topping the DAX. Reports that engine manufacturer CFM plans to supply engines, supporting the aircraft manufacturer’s 2024 production targets fueled buyer demand.

German banks were also on the move following the news of German regulators removing Deutsche Bank’s monitor. Deutsche Bank advanced by 1.94%, while Commerzbank rose by 1.26%.

Auto stocks also found much-needed support despite potential US tariffs on the sector. Daimler Truck Holding rallied 2.60%, while Porsche and BMW gained 0.91% and 0.76%, respectively. Volkswagen and Mercedes Benz Group also ended higher.

German Inflation Boosts December Rate Cut Bets

According to preliminary data, Germany’s annual inflation rate increased from 2.0% in October to 2.2% in November. While climbing above the ECB’s 2% target, inflation was lower than a forecasted 2.3%. Month-on-month, consumer prices declined by 0.2%, supporting bets on a December ECB rate cut.

Underlying inflation trends also bolstered expectations of a more dovish ECB rate path. Germany’s harmonized inflation rate dropped by 0.7% month-on-month in November.

Bank of France Governor and ECB policymaker Villeroy de Galhau hinted at a potential 50-basis point December rate cut on Thursday, reportedly saying,

“Seen from today, there is every reason to cut on December 12. Optionality should remain open on the size of the cut, depending on incoming data, economic projections, and our risk assessment.”

In October, Fitch Ratings projected a 25-basis point December ECB rate cut and quarterly rate cuts throughout 2025.

German Retail Sales and Unemployment in Focus

On Friday, November 29, German retail sales and unemployment figures could further influence sentiment toward the ECB rate path.

Economists expect retail sales to fall 0.3% in October after jumping 1.2% in September. A larger-than-expected fall in retail sales may dampen demand-driven inflation, supporting a more dovish ECB rate path.

Labor market data may draw more ECB interest after Germany’s GfK Consumer Climate Report. Economists predict the unemployment rate will remain at 6.1% in November while expecting unemployment to increase by 20k. A larger-than-expected increase in unemployment and a higher unemployment rate could raise bets on a 50-bps December rate cut.

The German GfK Consumer report highlighted rising concerns about unemployment, affecting income expectations and the willingness to buy.

Eurozone Inflation to Dictate December Policy Move

While Germany’s economic data needs consideration, Eurozone inflation figures could be crucial for the ECB’s December policy decision.

Economists forecast the Eurozone’s core inflation rate to rise from 2.7% in October to 2.8% in November. A larger-than-expected increase may dampen investor bets on a 50-basis point December ECB rate cut. A less dovish ECB rate path may drag the DAX toward 19,000. Conversely, softer-than-expected inflation figures could drive the DAX toward its all-time high of 19,675.

US Market Trends Lend Support

On Thursday, November 28, US equity futures advanced amid lower Treasury yields, supporting demand for DAX-listed stocks.

However, there was no trading on the Dow, the Nasdaq Composite Index, or the S&P 500 because of the Thanksgiving holiday.

Near-Term Outlook

In the near term, DAX movements will hinge on Eurozone inflation, central bank commentary, and US Tariff-related news.

Higher-than-expected Eurozone inflation, a less dovish ECB rate path, and tariff threats could drag the DAX toward 19,000. Conversely, softer inflation and ECB support for a 50-basis point December ECB rate cut offset tariff jitters, potentially pushing the DAX toward 19,500.

As of Friday morning, futures signaled a mixed session. DAX futures were down by 5 points, while the Nasdaq mini futures advanced by 122 points.

Investors should monitor Eurozone economic data, central bank remarks, and tariff-related updates for trading opportunities.

DAX Technical Indicators

Daily Chart

On Friday, the DAX remains above the 50-day and 200-day EMAs, confirming bullish price trends.

A DAX break above 19,500 could support a move toward its all-time high of 19,657. Furthermore, a breakout from 19,675 may bring 19,750 into play.

Euro area economic data, central bank commentary, and US tariff-related updates will influence DAX trends.

Conversely, a DAX fall through 19,350 could signal a drop toward the 50-day EMA. A break below the 50-day EMA may enable the bears to target the crucial 19,000 level.

With the 14-day RSI at 55.55, the DAX could break above the 19,675 all-time high before entering overbought territory.