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Dax Index News: Services PMI to Influence ECB Path – Expert Analysis on DAX Outlook
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Key Points:
- DAX slides 1.49% as Mercedes cuts profit forecast, dragging the auto sector.
- German producer prices decline 0.8% in August, missing forecasts. Weak demand signals slow recovery for the economy.
- On Monday, September 23, Services PMIs from Germany and the US will be in focus.
In this article:
Market Overview
On Friday, September 20, the DAX slid by 1.49%, reversing a 1.55% gain from the previous session to close at 18,720.
Key DAX Market Movers
Mercedes-Benz Group tumbled 6.81% after cutting its full-year profit margin forecast, impacting the broader auto sector. BMW and Volkswagen slid by 3.28% and 3.22%, respectively, while Porsche declined by 2.86%.
Infineon Technologies ended the session down 5.74% as investors reacted to Morgan Stanley downgrading ASML, a major player in the computer chip sector.
German Producer Prices Fall Less Than Expected
German producer prices declined by 0.8% year-on-year in August, mirroring July’s drop. Despite economists expecting producer prices to drop by 1.0% in August, the latest figures offered few signals of improving demand and momentum in the German economy.
Weak demand leaves the German economy in a precarious position, with economists not expecting the German economy to return to growth until late in the year.
Expert Views on the German Economy
Bloomberg Economics Western Europe Economy Team Leader Zoe Schneeweiss shared a Bloomberg article, stating,
“German economy is only expected to resume growth at the end of the year.”
Schneeweiss also shared a chart indicating that the German economy will likely underperform the Eurozone economy until Q1 2025.
German Private Sector PMIs in Focus
On Monday, September 23, private sector PMIs from Germany will require investor consideration. The Services PMI will likely influence the ECB rate path more as a greater contributor to inflation than the manufacturing sector.
Economists forecast the HCOB Services PMI to fall modestly from 51.2 in August to 51.0 in September. A larger-than-expected drop may raise investor bets on a Q4 2024 ECB rate cut. The ECB is date-dependent after the September rate cut. Investors should also consider employment and price trends that could give additional clues about inflation.
US Market Trends
On Friday, September 20, the US equity markets had a mixed end to the week. The Nasdaq Composite Index and the S&P 500 saw losses of 0.36% and 0.19%, respectively, while the Dow advanced by 0.09%.
US Economic Calendar
On Monday, private sector PMIs from the US will also garner investor interest. The Services PMI will impact market risk sentiment more, contributing almost 80% to the US economy.
Economists forecast the S&P Global Services PMI to fall slightly from 55.7 in August to 55.2 in September.
A more marked decline may bolster bets on Q4 2024 Fed rate cuts. However, investors should also consider job creation and input price trends. A sharp fall in employment and softer wage growth could retrigger investor fears of a hard US economic landing, affecting demand for DAX-listed stocks.
Beyond the numbers, investors should also monitor comments from the Fed. FOMC Member Austan Goolsbee is on the calendar to speak. His views on the economic outlook, the labor market, and the Fed rate path could also influence demand for DAX-listed stocks.
Near-Term Outlook
Near-term DAX trends will depend on the Services PMIs and central bank commentary. A modest decline in the US Services PMI could boost bets on a soft US landing and a dovish rate path, supporting a DAX return to 19,000. Conversely, a slide in the US Services PMI could retrigger fears of a hard US landing, possibly sending the DAX below 18,500.
The futures markets indicate a potential rally, with DAX and Nasdaq mini futures up by 82 and 122 points, respectively.
Investors should stay alert to central bank chatter and economic indicators. Stay informed with our latest news and analysis to manage your risks effectively.
DAX Technical Indicators
Daily Chart
The DAX hovers above the 50-day and 200-day EMAs, confirming bullish price trends.
A return to 18,750 could support a move toward the September 19 all-time high of 19,045. Furthermore, a break above 19,045 could bring 19,200 into play.
Services PMIs and central bank commentary require investor consideration.
Conversely, a break below 18,600 could signal a fall toward the 50-day EMA.
The 14-day RSI at 54.76 suggests a return to 19,045 before entering overbought territory.
About the Author
Bob Masonauthor
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.
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