DAX Index Today: China Tariffs, Post-Fed Reaction, and US Producer Prices

The Overview of the DAX Performance

On Wednesday (June 12), the DAX rallied 1.42%. Reversing a 0.68% loss from Tuesday (June 11), the DAX ended the session at 18,631.

German and China Inflation Trends Support Early Wednesday Gains

Finalized inflation numbers from Germany had a limited impact on market risk appetite. The annual inflation rate rose from 2.2% to 2.4% in May, aligning with the preliminary numbers.

Before the European opening bell, inflation figures from China sent mixed signals. Producer prices declined 1.4% year-on-year in May after a fall of 2.5% in April. However, consumer prices increased by 0.3% after advancing 0.3% in April.

The less marked decline in producer prices signaled an improving demand environment, driving buyer demand for DAX-listed stocks.

French President Emanuel Macron also eased fears of a far-right government, saying he was discussing an alliance to maintain political stability and would not resign.

US CPI Report Fueled DAX Breakout

Later in the session on Wednesday, softer-than-expected US inflation numbers fueled market risk appetite.

The annual inflation rate fell from 3.4% to 3.3%, with core inflation down from 3.6% to 3.4%. Economists forecast inflation rates of 3.4% and 3.5%, respectively.

However, the FOMC interest rate decision, economic projections, and FOMC press conference were in focus after the European closing bell.

The Fed stood pat on interest rates, in line with market expectations. However, more hawkish FOMC Economic Projections surprised the markets. The Fed raised its Core PCE inflation and Fed Funds Rate projections for 2024.

On Wednesday, the Dow slipped by 0.09%. Nevertheless, the S&P 500 and the Nasdaq Composite Index advanced by 0.85% and 1.53%, respectively. The softer inflation numbers trumped the economic projections.

The Wednesday Market Movers

US inflation numbers drove buyer demand for tech stocks. Siemens Energy AG and SAP rallied 3.53% and 3.42%, respectively, with Infineon Technologies gaining 2.28%.

However, bank and auto stocks had a mixed mid-week session.

Commerzbank declined by 0.74%, while Deutsche Bank gained 1.11%.

Porsche tumbled 7.18%, with Volkswagen sliding by 1.48%. BMW and Mercedes Benz Group saw losses of 0.94% and 0.90%, respectively. News of the European Commission planning to introduce tariffs on Chinese EV imports intensified fears of a retaliatory response from China.

German Wholesale Prices and Eurozone Industrial Production

German wholesale prices will draw investor attention on Thursday.

Economists forecast wholesale prices to fall 0.6% year-on-year in May after decline of 1.8% in April. Additionally, economists expect wholesale prices to increase by 0.3% month-on-month after rising by 0.4% in April.

A pickup in wholesale prices could signal an improving demand environment and affect investor expectations of a July ECB rate cut.

Later in the morning session, industrial production numbers for the Eurozone also need consideration.

Economists expect industrial production to increase by 0.2% in April after rising by 0.6% in March. German industrial production fell by 0.1% in April after a decline of 0.4% in March.

US Producer Prices, Jobless Claims, and Fed Speakers

Later in the session on Thursday, US producer prices will attract investor attention. Economists forecast producer prices to rise by 0.1% in May after an increase of 0.5% in April. Additionally, economists expect core producer prices to increase by 0.3% after a 0.5% rise in April.

Softer-than-expected numbers could signal a further dampening of demand-driven inflationary pressures.

However, US jobless claims data also need consideration. Economists predict initial jobless claims to increase from 225k to 229k in the week ending June 8. A larger-than-expected increase could refuel investor expectations of multiple 2024 Fed rate cuts. A less hawkish Fed rate path may drive buyer demand for riskier assets.

Beyond the numbers, investors should monitor FOMC member chatter. Fed Vice Chair John Williams is on the calendar to speak. Comments regarding inflation and the interest rate trajectory could move the dial.

Near-Term Outlook

Near-term trends for the DAX will hinge on central bank chatter, German economic indicators, and US producer prices. Softer-than-expected US producer prices could counter the effects of more hawkish FOMC economic projections.

On the Futures markets, the DAX was down 38 points, while the Nasdaq mini was up by 138.

DAX Technical Indicators

Daily Chart

The DAX sat above the 50-day and 200-day EMAs, sending bullish price signals.

A DAX break above the 18,650 level could give the bulls a run at the 18,800 handle. A return to 18,800 could signal a move toward the all-time high at 18,893.

German wholesale prices, US producer prices, US jobless claims, and Fed chatter require consideration.

Conversely, a DAX fall through the 50-day EMA could signal a drop to the 18,250 handle. A break below 18,250 could give the bears a run at the 18,000 handle.

The 14-day RSI at 54.27 suggests a return to the all-time high before entering overbought territory.

4-Hourly Chart

The DAX held above the 50-day and 200-day EMAs, affirming the price signals.

A DAX break above 18,650 could signal a move toward 18,800.

However, a DAX fall through 18,600 could give the bears a run at the 50-day EMA. A break below the 50-day EMA would bring the 200-day EMA into view.

The 14-period 4-hour RSI at 57.13 indicates a DAX climb to the all-time high at 18,893 before entering overbought territory.