DAX Index Today: Economic Sentiment and US Retail Sales Key to DAX Moves

DAX Ends Three-Day Winning Streak

On Monday, July 15, the DAX slid by 0.84%. Partially reversing a 1.15% gain from Friday, July 12, the DAX ended the session at 18,591. Significantly, the DAX ended a three-day winning streak.

The Monday DAX Market Movers

Siemens Energy AG slid by 4.94% over concerns about a Trump re-election. Trump has plans to end offshore wind development.

Auto stocks contributed to the DAX’s losses amidst concerns about demand. BMW declined by 2.56%, with Mercedes Benz Group falling by 0.49%.

China Economic Data Sets the Tone

The Chinese economy grew by 4.7% year-on-year in Q2, down from 5.3% in Q1. Weaker growth impacted the demand for DAX-listed stocks. A waning Chinese economy could adversely affect the global economy and German companies.

Meanwhile, economic indicators from the Euro area drew investor interest.

Eurozone Economic Indicators: Industrial Production Falls

Industrial production across the Euro area fell by 2.9% year-on-year in May after a decline of 3.1% in April. Germany reported one of the largest annual decreases across the Euro area, highlighting the weak demand environment.

German Data: Economic Sentiment Likely to Tumble

On Tuesday, ZEW Economic Sentiment figures could highlight Germany’s economic troubles.

Economists expect the German ZEW Economic Sentiment Index to fall from 47.5 in June to 42.5 in July. Weaker-than-expected numbers could raise investor expectations of an economic recession.

Fed Chair Powell Fuels Speculation About Multiple Fed Rate Cuts

On Monday, Fed Chair Powell said that Q2 US inflation figures gave the Fed increasing confidence that inflation was returning to the 2% target.

Investors cemented bets on a September Fed rate cut. According to the CME FedWatch Tool, the chances of a September Fed rate cut increased from 96.3% on Friday, July 12, to 100% on Monday, July 15.

Fed rate cuts reduce borrowing costs, boosting demand for DAX-listed stocks.

US Market Trends

In response to Fed Chair Powell’s speech, the US equity markets ended the session with gains. On Monday, the Nasdaq Composite Index and the Dow advanced by 0.40% and 0.53%, respectively, while the S&P 500 gained 0.28%.

On Tuesday, the US economy will be in focus.

US Economic Indicators: Retail Sales in the Spotlight

Later in the Tuesday session, US retail sales require investor consideration.

Economists forecast retail sales to stall in June after a 0.1% rise in May. Downward trends in retail sales could dampen demand-driven inflation and support multiple 2024 Fed rate cuts.

Rising investor bets on multiple 2024 Fed rate cuts could boost demand for DAX-listed stocks. However, a marked decline in retail sales may refuel investor fears of a hard US landing. Private consumption contributes over 60% to the US economy.

Fears of a hard landing could impact market risk sentiment.

Could the US economy fall into a recession?

Bloomberg TV Asia Pacific Chief Markets Editor David Ingles recently commented on the US economy. He said,

“Alas, looks like the US economy is cooling quicker than most analysts think. The Bloomberg US Economic Surprise Index has dropped to a 9-year low.”

Near-Term Outlook

Near-term trends for the DAX depend on US retail sales (Tues), Euro area inflation numbers (Wed), and the ECB press conference (Thurs). Weaker data could signal more dovish rate paths and a DAX move toward 19,000.

On the Futures markets, the DAX was down by 28 points, while the Nasdaq mini gained 62 points.

Investors should remain alert amidst growing concerns about China. 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 Monday high of 18,744 could signal a move to the May high of 18,893.

ZEW Economic Sentiment numbers, central bank chatter, and US retail sales require consideration on Tuesday.

Conversely, a DAX break below the 18,500 handle could bring the 50-day EMA into play.

The 14-day RSI at 56.09 indicates a DAX move to the May high before entering overbought territory.

4-Hourly Chart

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

A move through the 18,750 handle may bring the May high of 18,893 into play.

However, a DAX drop below 18,500 could give the bears a run at the 50-day.

The 14-period 4-hour RSI at 57.19 suggests a DAX return to 18,800 before entering overbought territory.