Dax Index News: Seven-Day Rally Hopes Rise on Rate Cut Speculation

DAX Targets Seven-Day Rally Amid Rate-Cut Optimism

The DAX Index opened Thursday, January 23, up 0.10% to 21,276. Optimism about the ECB’s rate path and upbeat corporate earnings continue to offset US tariff concerns. Earlier this week, the DAX reached a record high of 21,331, brushing aside Trump’s renewed tariff threats against the EU and China.

Investors anticipate that the EU and the Trump administration will reach an agreement on US oil and gas purchases to avert tariffs. Similarly, investors expect China to find common ground with Trump’s administration.

Daniel Kral, European macro specialist at Oxford Dynamics, commented on Trump’s tariff announcements, stating,

“A very cautious sigh of relief in the EU, particularly in Ireland & CEE (probably not yet in Denmark), as the continent seems to be spared the first round of US tariffs. Indicates a deal can be done – EU to buy more US LNG, oil & defence equipment, align on China, and lay off US tech giants.”

Sector Performance:

Hopes of the EU avoiding punitive US tariffs drove much-needed demand for auto stocks, contributing to the early gains. Volkswagen rallied 1.45%, while Porsche rose 0.26%. BMW and Mercedes-Benz Group also advanced.

Adidas extended its gains from Wednesday, up 0.27% after upbeat preliminary fourth quarter results.

Eurozone Consumer Confidence and the ECB Outlook

On Thursday, the focus will shift to Eurozone consumer confidence data. Economists forecast the Eurozone Consumer Confidence Index to rise modestly from -14.5 in December to -14.2 in January. Weaker-than-expected numbers would reinforce a more dovish ECB rate path, bolstering demand for rate-sensitive German stocks.

Waning consumer confidence could dampen spending and inflationary pressures. Lower interest rates would weaken the EUR and borrowing costs, potentially boosting company earnings.

Conversely, an unexpected jump in consumer confidence could test bets on multiple ECB rate cuts.

ECB commentary also requires monitoring. Support for multiple rate cuts could sustain risk appetite, while caution may trigger a DAX pullback.

US Markets Highlights

US equity markets extended their gains on Wednesday, January 22, fueled by upbeat optimism around President Trump’s AI initiatives and strong corporate earnings. The Nasdaq Composite Index gained 1.28%, while the Dow and the S&P 500 rose 0.30% and 0.61%, respectively.

This week, President Trump announced an AI joint venture, Stargate, involving OpenAI, Oracle (ORCL), and Japan’s SoftBank. The initiative aims to create data centers and over 100,000 US jobs. Softbank’s ARM Holdings (ARM) soared 15.93%, reflecting strong investor confidence.

Meanwhile, Netflix (NFLX) rallied 9.69% after reporting a record number of subscribers.

In the bond markets, 10-year US Treasury yields edged higher midweek but remained well below the January 14 high of 4.809%, reflecting market bets on a more dovish Fed rate path.

US Jobless Claims on the Radar

Turning to Thursday’s US session, economists expect initial jobless claims to rise from 217K (week ending January 11) to 220k (week ending January 18).

An unexpected spike above 250k could raise expectations of a more dovish Fed rate path. A weaker labor market could impact wage growth, dampening consumer spending and demand-driven inflation. Conversely, an unexpected fall may signal a more hawkish Fed rate path.

Investors should also monitor Trump’s policy announcements. Markets remain sensitive to tariff developments.

Near-Term Outlook

The DAX’s trajectory hinges on central bank forward guidance and US tariff developments. Hawkish central bank chatter or rising threats of sweeping US tariffs could pull the DAX below 21,000. Conversely, dovish central bank policy signals and the absence of tariff-related news could drive the DAX to new highs.

As of Thursday morning, futures pointed to a choppy session. The Nasdaq 100 mini dropped by 71 points.

DAX Technical Indicators

Daily Chart

After a six-day winning streak, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs), confirming bullish price trends.

If the DAX breaks out from Wednesday’s record high of 21,331, the Index could target 21,500 next. A break above 21,500 may signal a move toward 21,750.

Conversely, a DAX drop below 20,150 could indicate a fall below 21,000. A fall through 21,000 may bring 20,750 into sight.

With the 14-day Relative Strength Index (RSI) at 77.33, the DAX remains in overbought territory (RSI higher than 70). Selling pressure could intensify at Wednesday’s high of 21,331 due to overbought conditions reflected by the RSI.

Final Thoughts

The DAX faces potential volatility as central bank policies and US tariff dynamics play out. Investors should closely monitor tariff-related news and central bank commentary for directional cues.

Stay ahead of market trends by following our updates on DAX movements, US tariff developments, and central bank policies here to navigate the evolving financial landscape effectively.