DAX Index Today: Corporate Earnings and US Jobless Claims to Set Market Tone

Market Overview

On Wednesday, August 7, the DAX rallied 1.50%, closing at 17,615.

Wednesday: DAX Market Movers

• Continental AG surged 6.84% after beating Q2 earnings forecasts.
• The auto sector benefitted from the earnings beat, with Mercedes Benz Group and Daimler Truck Holding seeing gains of 2.23% and 2.05%, respectively.
• Deutsche Bank (+1.56%) tracked EU banks into positive territory after ABN AMRO increased its net interest income projection for 2024.
• Commerzbank bucked the positive trend, sliding by 3.72% after reporting higher-than-expected loan loss provisions in Q2.

German Industry Rebounds Amid Export Slump

On Wednesday, August 7, the German industrial production and trade data sent mixed signals.

German industrial production increased by 1.4% in June after sliding by 3.1% in May. However, German exports signaled a waning demand environment, falling 3.4% in June.

The stats had a limited impact on the DAX, with a stronger USD/JPY driving buyer demand for riskier assets.

Expert Views on the German Economy

Oxford Economics Chief Economist and ECB Commentator Oliver Rakau commented on recent German factory orders, stating,

“A surge in car orders & a big ammunition order helped. But both look set to reverse next month. Core orders are broadly stagnant at historic lows. Get on with it ECB.”

Rakau’s view aligned with the latest HCOB Manufacturing PMI, which fell from 43.5 in June to 43.2 in July, suggesting the uptick in factory orders and industrial production could be short-lived.

Corporate Earnings

On Thursday, Siemens AG, Rheinmetall AG, Deutsche Telekom, Allianz, and Munich Re Group will release earnings reports. The results and forward guidance will likely influence DAX trends ahead of the US session.

US Market Trends

On Wednesday, August 7, the US equity markets closed in negative territory. The Nasdaq Composite Index slid by 1.05%, while the Dow and the S&P 500 saw losses of 0.60% and 0.77%, respectively.

Super Micro Computer Inc. (SCMI) missed earnings targets, leading to a tech sector pullback. Investors were cautious despite a stronger USD/JPY, with US jobless claims looming.

Expert Views on the Fed and Risk Sentiment

The Kobleissi Letter, an industry-leading commentary on the global capital markets, commented on the Fed rate path, saying,

“The Fed is in a lose-lose situation: If the Fed cuts rates aggressively right now, markets tank further and they risk a resurgence of inflation. Cutting US rates will only make the Yen carry trade unwinding WORSE, likely sending the Nasdaq into bear market territory. If the Fed doesn’t cut rates right now, recession fears will continue to mount. No rate cuts means more worry about rising unemployment which is now at a 3-year high.”

Views on the Bank of Japan and the Fed’s interest rate paths will remain crucial amid the risk of another Yen carry trade unwind.

US Economic Calendar

On Thursday, continuing jobless claims will draw investor interest. Economists forecast continuing jobless claims to decline from 1,877k in the week ending July 20 to 1,870k in the week ending July 27.

An unexpected increase in claims could drive fears of a US hard economic landing and a more dovish Fed rate path. Rising US recession fears and the threat of a Yen carry trade unwind may impact demand for riskier assets.

The DAX slid by 2.30% on Thursday, August 1, as investors reacted to a sharp increase in jobless claims, stoking fears of a US hard landing.

Near-Term Outlook

Near-term DAX trends hinge on corporate earnings, US jobless claims, and central bank commentary. An unexpected spike in US jobless claims could retrigger fears of a hard landing and impact demand for riskier assets. A marked decline in the US dollar could also fuel fears of another Yen carry trade unwind.

In the futures markets, the DAX was down 157 points, while the Nasdaq mini was up by 30 points.

Investors should remain vigilant with corporate earnings and crucial economic data releases in focus. Monitor the news wires, the economic calendar, 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 sat below the 50-day EMA while hovering above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

A return to 17,750 could signal a move toward 18,000. A breakout from 1800 could give the bulls a run at the 50-day EMA.

Corporate earnings, US jobless claims, and central bank commentary require consideration.

Conversely, a DAX drop below the 17,615 support level and the 200-day EMA could signal a fall toward the 17,003 support level.

The 14-day RSI at 37.94 indicates a DAX fall to 17,500 before entering oversold territory.

4-Hourly Chart

The DAX sat well below the 50-day and 200-day EMAs, sending bearish price signals.

A breakout from 17,750 would support a move toward the 50-day EMA.

However, a DAX drop below the 17,615 support level could give the bears a run at the 17,003 support level.

The 14-period 4-hour RSI at 55.31 suggests a DAX break above the 50-day EMA before entering overbought territory.