DAX Index Today: 18,000 Hinged on the US Jobs Report

Overview of the DAX Performance on Thursday

The DAX rallied 0.71% on Thursday. After gaining 0.10% on Wednesday, the DAX closed the session at 17,843. Significantly, the DAX climbed to an all-time high of 17,879.

ECB Forecasts and Bets on a June ECB Interest Rate Cut

On Thursday, German factory orders unexpectedly plunged 11.3% in January after surging by 12.0% in December. The numbers had a limited impact on market risk sentiment and the DAX. Major orders impacted the headline figure and aligned with expectations of a German economic recession.

However, the ECB drove buyer demand for DAX-listed stocks. Downward revisions to inflation and growth forecasts fueled bets on a June ECB rate cut. ECB Staff forecasted a 2024 inflation rate of 2.3%, down from 2.7%.

ECB President Christine Lagarde boosted market sentiment, saying market bets on the timeline for an ECB rate hike were more appropriate. The ECB left interest rates at 4.5%.

US Labor Market Data and the Fed to Drive Bets on an H1 2024 Fed Rate Cut

Later in the Thursday session, US initial jobless claims remained at 217k in the week ending March 2. The numbers allowed investors to focus on a second day of testimony from Fed Chair Powell.

The Fed Chair supported bets on an H1 2024 Fed rate cut, reiterating the likelihood of a Fed rate cut later in the year.

On Thursday, the Nasdaq Composite Index and the S&P 500 rallied 1.51% and 1.03%, respectively. The Dow gained 0.34%.

The Thursday Market Movers

Symrise (AG) gained 3.21% as upbeat forecasts for 2024 from Wednesday resonated.

Rising bets on H1 2024 ECB and Fed rate cuts supported tech stocks. Infineon Technologies and SAP gained 3.07% and 1.43%, respectively.

Bank stocks also contributed to the gains. Commerzbank and Deutsche Bank advanced by 3.27% and 1.19%, respectively. Investors ignored news of Moody’s downgrading its outlook for German banks from stable to negative.

However, auto stocks had a negative session. Porsche declined by 1.24%. BMW and Mercedes-Benz Group ended the session down 0.69% and 0.62%, respectively. Volkswagen slipped by 0.21%. Downward ECB Staff revisions to growth forecasts likely influenced the buyer appetite for auto stocks.

German Industrial Production and Producer Prices

On Friday, German industrial production and producer prices will garner investor attention. An unexpected fall in producer prices could support bets on a June ECB rate cut. Economists forecast producer prices to increase by 0.2% in January after falling 1.2% in December.

After a 12.0% surge in factory orders in December, economists expect industrial production to rise by 0.6%. Another decline in industrial production would support expectations of a Q1 2024 German recession.

Eurozone GDP and employment change numbers for Q4 also need consideration. Revisions to preliminary figures influence market risk sentiment but are unlikely to impact market bets on a June ECB rate cut. According to 2d estimates, the Eurozone economy stalled in Q4, while employment increased by 0.3%.

While the euro area stats will draw interest, the US economic calendar will likely have more impact.

US Economic Calendar: The US Jobs Report

On Friday, the US Jobs will warrant investor attention. Weaker-than-expected labor market data would support bets on an H1 2024 Fed rate cut. Nonfarm payrolls and the unemployment rate are the focal points. However, investors must consider wage growth.

Economists forecast US nonfarm payrolls to increase by 200k in February and a steady unemployment rate of 3.7%. However, economists expect average hourly earnings to soften from 4.5% (January) to 4.4% year-on-year in February.

Beyond the numbers, investors must also consider Fed reactions to the US Jobs Report.

Short-term Forecast

Near-term trends for the DAX will likely hinge on the US Jobs Report and central bank chatter. Expectations of H1 2024 ECB and Fed rate cuts remain a tailwind. However, signals of a US hard landing could impact market risk sentiment.

On Thursday, the DAX futures were up 31 while the Nasdaq mini was down 31 points.

DAX Technical Indicators

Daily Chart

The DAX remained well above the 50-day and 200-day EMAs, affirming bullish price signals.

A DAX break above the Thursday all-time high of 17,879 would bring the 18,000 handle into play.

Euro area economic indicators and the US Jobs Report need consideration.

A break below the 17,750 handle would bring the 17,600 handle into play.

The 14-day RSI at 79.45 shows the DAX in overbought territory. Selling pressure could intensify at the ATH of 17,879.

4-Hourly Chart

The DAX sat above the 50-day and 200-day EMAs, confirming the bullish price trends.

A DAX return to the 17,879 all-time high would support a move to the 18,000 handle.

However, a DAX drop below the 17,750 handle would bring the 17,600 handle into play.

The 14-period 4-hour RSI at 76.17 shows the DAX in overbought territory. Selling pressure could intensify at the Thursday ATH of 17,879.