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Dax Index News: Volatile Market Sentiment as DAX Awaits German Trade Data
By:
Key Points:
- DAX dropped 0.20% on Tuesday, hit by Chinese economic concerns.
- Investors eye German trade data for more insights into the German economy.
- Central bank commentary and Middle East tensions may drive DAX volatility as markets brace for rate cuts.
In this article:
Market Overview
On Tuesday, October 8, the DAX declined by 0.20%, following a 0.09% loss from Monday, closing at 19,067.
Sentiment toward the Chinese economy impacted demand for riskier assets.
Auto Stocks Drag the DAX into Negative Territory
Auto stocks reversed their gains from Monday, leaving the DAX with losses. Mercedes-Benz Group and BMW declined by 2.13% and 2.03%, respectively, while Volkswagen ended the session down 1.43%.
Concerns about demand from China weighed on auto stocks, with retail stocks also declining. Adidas fell by 1.38%.
Chinese Economy and Market Sentiment
On Tuesday, a lack of fresh stimulus measures from Beijing impacted market risk sentiment. While Mainland China’s equity markets rallied, the Hang Seng Index tumbled 9.41%.
Investors reacted to the National Development and Reform Commission (NDRC) press conference and the silence on more stimulus. The Mainland China markets reopened after the National Holiday, leaving investors to play catch up after the week-long market closures.
German Industrial Production Spikes Amid Weak Orders
On Tuesday, industrial production figures from Germany offered little hope for an economic reset. Industrial production surged by 2.9% in August, reversing a 2.9% drop in July. However, factory orders tumbled by 5.8% in August, raising doubts about an economic recovery. Weak private sector PMIs also painted a grim picture of the German economy.
Negative sentiment toward the German economy continued supporting expectations of a 25-basis point October ECB rate cut.
Expert Views on the German Economy
Oxford Economics European Macro specialist Daniel Kral commented on Germany’s industrial production report, stating,
“German industrial production grew by 3.3% m/m in August, driven by the automotive industry, up by a whopping 20% (very strange in the holiday month). But other components were flat while leading indicators remain bleak. Too early to say German industry is out of the woods.”
Focus Shifts to German Trade Data
On Wednesday, October 9, trade data from Germany will offer more insights into the German economy. Economists expect the trade surplus to widen from €16.8 billion in July to €18.4 billion in August.
A wider trade surplus could signal a pickup in demand. However, economists forecast imports and exports to slide in August, indicating weakening demand. Weaker-than-expected data could fuel expectations of the German economy contracting in 2024, supporting multiple Q4 2024 ECB rate cuts.
US Consumer Optimism Improves Modestly
In the US, the RCM/TIPP Economic Optimism Index increased slightly from 46.1 in September to 46.9 in October. The modest improvement in consumer sentiment had a limited impact on expectations of a November Fed rate cut.
However, investors hope that Thursday’s US CPI Report will show softer inflation, boosting demand for riskier assets.
US Market Trends
On Tuesday, October 8, the US equity markets recovered their losses from the Monday session. Tech stocks led the way, with the Nasdaq Composite Index rallying 1.45%. The Dow and the S&P 500 saw gains of 0.30% and 0.97%, respectively.
Focus on the Fed Ahead of CPI Release
On Wednesday, investors should monitor FOMC member speeches as the US CPI Report looms. Fed Vice Chair John Williams and FOMC members Thomas Barkin, Austan Goolsbee, and Philip Jefferson are on the calendar to speak. Their views on the US labor market, inflation, the economy, and the Fed rate path could impact demand for riskier assets.
Support for multiple Q4 2024 Fed rate cuts could push the DAX toward 19,250. On the other hand, calls to delay rate cuts may drive the DAX toward 18,750.
Near-Term Outlook
In the short term, DAX trends will likely hinge on central bank commentary and Thursday’s US CPI Report. Softer US inflation and dovish central bank comments could drive demand for DAX-listed stocks. Conversely, hawkish Fed commentary or a hotter US inflation print may dampen market risk appetite.
The futures markets signal a choppy start to the Wednesday session, with the DAX and Nasdaq mini down 3 and 57 points, respectively. HK and Mainland China-listed equity markets saw heavy losses in the morning session, affecting market risk sentiment.
Investors should stay alert to updates on the Middle East conflict, central bank chatter, and economic indicators. An escalation in the Middle East conflict could fuel a flight to safety and a DAX drop below 19,000. Stay informed with our latest news and analysis to manage your risks effectively.
DAX Technical Indicators
Daily Chart
The DAX remains above the 50-day and 200-day EMAs, affirming bullish price signals.
A break above Tuesday’s high of 19,099 could support a move toward 19,250. Furthermore, a breakout from 19,250 may bring the all-time high of 19,492 into play.
Investors should continue to focus on the Middle East, Euro area economic data, and central bank commentary, These may influence near-term market sentiment.
Conversely, a break below 19,000 could signal a drop toward the 18,750 level. A fall through 18,750 may give the bears a run at the 50-day EMA.
The 14-day RSI at 55.41 suggests a move to 19,500 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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