DAX Index Today: Corporate Earnings and Services PMIs in Focus

DAX Extends Gains from Monday

On Tuesday, July 23, the DAX gained 0.82%. Following a 1.29% rally on Monday, July 22, the DAX closed at 18,558.

Tuesday: DAX Market Movers

• SAP surged by 7.15% on better-than-expected quarterly earnings results.
• Deutsche Bank rose 1.36% ahead of its earnings release on Wednesday.
• Porsche ended the session down 2.90% after cutting its 2024 outlook.
• Concerns about waning demand from China impacted the broader auto sector. Daimler Truck Holding slid by 4.38%, while Volkswagen fell by 0.94%.

Eurozone Economic Indicators

Eurozone Consumer Confidence Indicator increased from -14.0 in June to -13.0 in July. The modest pickup was unlikely to impact investor expectations of a September ECB rate cut. The economic indicators on Wednesday will likely have more influence on the ECB rate path.

German Consumer Confidence Impact

On Wednesday, July 24, the German economy will be in focus.

Economists forecast the GfK Consumer Confidence to increase from -21.8 to -21.0 for August. A higher-than-expected number could signal a pickup in consumer spending. However, investors should consider the sub-components, including the Willingness to Save and the Willingness to Buy.

For July, a higher Willingness to Save and a lower Willingness to Buy signaled a weak consumer spending outlook. Similar trends for August could support investor bets on September and December ECB rate cuts. Weaker consumer spending can dampen demand-driven inflation.

German Services PMI and the ECB Rate Path

Later in the European session, German Services PMI numbers also require consideration.

Economists forecast the German HCOB Services PMI to remain steady at 53.1 in July.

Lower-than-expected numbers could support expectations of multiple 2024 ECB rate cuts. The services sector accounts for about 70% of the German economy and contributes to inflation.

However, investors should consider the sub-components, including employment and prices. Slower job creation and lower prices would support a more dovish ECB rate path and boost demand for DAX-listed stocks.

Corporate Earnings: Banks in Focus

Beyond the economic data, corporate earnings will garner investor interest.

Deutsche Bank will release its quarter earnings results alongside BNP Paribas, UniCredit, and Santander.

Forward guidance on net interest income could be crucial as investors increase expectations of ECB interest rate cuts.

US Housing Sector Impact

US existing homes tumbled 5.4% in June after a 0.7% decline in May. Falling demand for existing homes could ease inventory pressures and impact house prices. Higher inventories and falling prices may reduce rents. Downward trends in rents could dampen housing services and headline inflation.

The weaker-than-expected numbers supported investor bets on a September Fed rate cut. According to the CME FedWatch Tool, the probability of a September Fed rate cut increased from 92.3% on July 22 to 96.1% on July 23.

US Market Trends

On Tuesday, the US equity markets saw modest losses as investors awaited earnings from Alphabet Inc. (GOOGL) and Tesla Inc. (TSLA).

The S&P 500 and the Dow declined by 0.16% and 0.14%, respectively, while the Nasdaq Composite Index fell by 0.06%

US Economic Indicators

Later in the session on Wednesday, US Services PMI numbers could be crucial.

Economists expect the S&P Global Services PMI to fall from 55.3 in June to 54.4 in July. Slower-than-expected service sector growth could fuel bets on multiple 2024 Fed rate cuts.

The services sector accounts for almost 80% of the US economy. However, investors should consider the employment and prices sub-components.

Lower job creation and softer prices could also support a more dovish Fed rate path. Expectations of a more dovish Fed rate path could fuel buyer demand for DAX-listed stocks.

Near-Term Outlook

Near-term DAX trends hinge on corporate earnings, the Services PMIs, and the US Personal Income and Outlays Report. Upbeat German corporate earnings and rising bets on multiple 2024 ECB and FED rate cuts could boost DAX demand.

In the futures markets, the DAX and the Nasdaq mini were down 189 and 79 points, respectively. Overnight, Alphabet Inc. (GOOGL) and Tesla Inc. (TSLA) released disappointing earnings results during after-hours trading, setting the tone for the Wednesday session.

Investors should remain alert with corporate earnings, economic data, and US politics in focus. Monitor the news wires, economic data, and expert commentary to manage trading strategies. Stay up-to-date with our latest news and analysis to manage risk.

DAX Technical Indicators

Daily Chart

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

A DAX breakout from the 18,500 handle could give the bulls a run at 18,750. A return to 18,750 would support a move toward 19,000.

Services PMIs and corporate earnings require consideration.

Conversely, a DAX break below the 50-day EMA could signal a drop toward 18,000.

The 14-day RSI at 54.69 indicates a DAX move to the May high of 18,893 before entering overbought territory.

4-Hourly Chart

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

A return to 18,750 handle would support a move toward 19,000.

However, a DAX break below 18,500 could signal a drop to the 50-day EMA. A fall through the 50-day EMA would bring the 200-day EMA into play.

The 14-period 4-hour RSI at 55.53 suggests a DAX return to 18,750 before entering overbought territory.