Dax Index News: Services PMI Data Key to Forecasting Market Trends

DAX Hits Another Record High

Market expectations of potential ECB and Fed rate cuts, along with US tariff developments, drove demand for German stocks.

On Thursday, January 23, the DAX rallied 0.74%, adding to Wednesday’s 0.25% gain to close at a record high of 21,412. Significantly, the DAX extended its winning streak to seven sessions, showcasing the Index’s resilience amid global uncertainties.

Investors responded to US President Trump’s speech at the World Economic Forum in Davos, where he urged central banks to lower interest rates. Lower borrowing costs could boost company earnings and valuations.

Sector Highlights: Siemens Energy Shines While Autos Diverge

Siemens Energy AG led the gains, surging 6.27%, with Fresenius Medical Care rallying 4.91%.

Meanwhile, the auto sector had a mixed session amid ongoing tariff uncertainty. Volkswagen rallied 1.66%, while BMW dropped by 1.07%.

Eurozone Consumer Confidence Improves

The Eurozone’s Consumer Confidence Index rose to -14.2 in January, up from -14.5 in December. However, the Index remained below its long-run average, reflecting ongoing economic uncertainties.

Current levels support a dovish ECB rate path, as weak consumer confidence may curb consumer spending, dampening inflationary pressures.

Private Sector PMIs Take Center Stage

On Friday, January 24, preliminary private sector PMI numbers for Germany and the Eurozone could influence market sentiment.

Economists forecast Germany’s HCOB Services PMI to slip from 51.2 in December to 51.0 in January while expecting the manufacturing sector to remain deep in contraction. The Eurozone PMIs are projected to follow a similar trend.

A significant drop in the Services PMI, along with weaker prices and employment data, could strengthen expectations of a dovish ECB rate path. Rising bets on multiple ECB rate cuts could drive the DAX to fresh highs.

Conversely, rising prices and higher employment could signal a less dovish ECB policy stance, potentially pressuring rate-sensitive German stocks.

Expert Views on Euro Area Inflation

Frederik Ducrozet, Head of Macroeconomic Research at Pictet Wealth Asset Management, recently commented on the Eurozone’s inflation trends, saying,

“One month’s data doesn’t make a trend, but euro area December HICP wasn’t a good print as services inflation momentum picked up again. We’ll need the full breakdown to extract the noise from the signal. No reason to challenge the ECB’s dovish bias for now.”

His comments underscored the significance of January’s PMI data in influencing ECB expectations.

US Jobless Claims Support Fed Rate Cuts

On January 23, US initial jobless claims rose from 217k (week ending January 11) to 223k (week ending January 18). The uptrend in claims could boost hopes for a more dovish Fed rate path. A deteriorating labor market may weaken wage growth, curbing consumer spending.

Notably, the Jobless Claims 4-week average rose from 212.75k to 213.5k.

US Markets Extend Gains on Trump’s Rate Call

US equity markets extended their gains from Wednesday, as investors reacted to President Trump’s calls for lower interest rates and oil prices. The Nasdaq Composite Index gained 0.22%, while the Dow and the S&P 500 rose 0.92% and 0.53%, respectively.

President Trump also eased fears of a US-China trade war, stating,

“Conversation with China’s Xi went fine. Would rather not have to use tariffs over China.”

US Economic Calendar: US Services PMI in Focus

On January 24, the S&P Global Services PMI is expected to drop from 56.8 in December to 56.5 in January.

A larger-than-expected drop could boost expectations of an H1 2025 Fed rate cut. The services sector accounts for around 80% of US GDP and remains the key inflation driver. Conversely, an unexpected rise may dampen Fed rate cut bets, potentially impacting demand for riskier assets.

Near-Term Outlook

The DAX’s performance will hinge on the Services PMIs, inflation signals, and central bank forward guidance. Higher inflation trends and hawkish central bank stances could pressure riskier assets, potentially pulling the Index toward 21,000. Conversely, softer inflation and growing support for multiple ECB and Fed rate cuts may drive the DAX toward 21,750.

External factors, such as potential stimulus from Beijing and US-EU trade negotiations, will also play a role. Chinese stimulus could support German exports, though US tariffs may counteract this benefit.

As of Friday morning, futures pointed to a mixed European session. DAX futures were up 91 points, while the Nasdaq 100 mini dropped by 35 points. News of Trump wanting to avoid tariffs on China contributed to the DAX futures’ gains.

DAX Technical Indicators

Daily Chart

After seven consecutive gains, the DAX remains positioned well above the 50-day and 200-day Exponential Moving Averages (EMAs), sending bullish price signals.

A break above the January 23 record high of 21,423 could signal a move above 21,500. A breakout from 21,500 may enable the bulls to target the 21,750 level next.

Conversely, a DAX break below 21,350 may indicate a fall toward 21,000, a key support level.

With the 14-day Relative Strength Index (RSI) at 79.34, the DAX remains in overbought territory (RSI higher than 70). Selling pressure could intensify at Thursday’s record high of 21,423.

Conclusion: Key Drivers to Watch

Optimism around rate cuts and global economic developments remain pivotal for the DAX. Investors should monitor services PMI data, ECB commentary, and US tariff updates for further direction.

Read our detailed analysis of how global market dynamics influence the DAX’s performance here.