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DAX Index Today: Eurozone Consumer Confidence and US Politics in Focus
By:
Key Points:
- The DAX rallied 1.29% on Monday, July 22, closing at 18,407.
- On Tuesday, July 23, Eurozone Consumer Confidence and corporate earnings will draw investor interest.
- Later in the session on Tuesday, US housing sector data and US politics will also require consideration.
In this article:
DAX Ends Five-Day Losing Streak
On Monday, July 22, the DAX rallied 1.29%. Reversing a 1.00% loss from Friday, July 19, the DAX closed at 18,407. Significantly, the DAX ended a five-day losing streak, the longest since December 2023.
Monday DAX Market Movers
Tech stocks were among the front-runners. Infineon Technologies surged 3.35%, while SAP gained 1.17%.
European bank stocks also trended higher. Deutsche Bank advanced by 3.06%, with Commerzbank gaining 2.30%. Hopes for upbeat earnings results drove buyer demand for bank stocks. Deutsche Bank will release earnings on Wednesday.
China Economic Indicators
On Monday, the People’s Bank of China (PBoC) unexpectedly cut loan prime rates and the Reserve Requirement Ratio. Lower rates could increase demand for credit and consumption. A new wave of policy measures from Beijing could restore confidence in achieving its 2024 growth target of 5%.
Looser monetary policy set the tone for the Monday European session.
Eurozone Economic Indicators
Economists forecast the Eurozone Consumer Confidence Index to rise from -14.0 in June to -13.2 in July. A pickup in consumer confidence could signal higher consumer spending. However, a modest increase will unlikely draw the ECB’s interest, which may boost demand for DAX-listed stocks.
Bets on multiple 2024 ECB rate cuts are tailwinds for the DAX.
Beyond the numbers, ECB Chief Economist Philip Lane will be on the calendar to speak. Views on the economy, inflation, and the ECB interest rate trajectory could move the dial. Support for September and December ECB rate cuts could boost DAX demand.
US Presidential Election Race Impact
On Sunday, July 21, US President Joe Biden withdrew from the 2024 Presidential Election Race, backing Kamala Harris.
Falling odds of a Donald Trump victory could ease concerns in Brussels about his foreign policies, particularly regarding trade and the Ukraine war. Poor relations between the EU and a Trump administration may impact EU trade terms and the DAX.
Although Trump led Kamala Harris in the FiveThirtyEight national polls, he lost ground according to betting odds.
AMP Head of Investment Strategy and Chief Economist Shane Oliver commented,
“Following Biden’s decision not to run, betting markets (PredictIT) have the Republicans v Democrats probability of winning back to where it was prior to the assassination attempt.”
US Market Trends
On Monday, the US equity markets ended the session in positive territory despite higher 10-year US Treasury yields. The Dow gained 0.32%, while the S&P 500 and the Nasdaq Composite Index saw gains of 1.08% and 1.58%, respectively.
Dip buyers returned after last week’s global IT outage.
US Economic Indicators
On Tuesday, US existing home sales require consideration.
Economists forecast existing home sales to increase by 3% in June after falling by 0.7% in May.
Increased demand for existing homes could reduce inventories, pushing up home prices. Tighter inventories and higher prices may raise rents, housing services, and headline inflation.
A higher inflation outlook could test investor bets on multiple 2024 Fed rate cuts, a negative for DAX-listed stocks.
Near-Term Outlook
Near-term DAX trends depend on ECB speeches and US politics. ECB support for multiple 2024 ECB rate cuts could boost demand for DAX-listed stocks. However, rising odds of a Trump victory in the US Presidential Election could impact buyer demand for DAX-listed stocks.
The DAX was up 51 points in the futures markets, while the Nasdaq mini declined by 60 points.
Investors should remain alert with ECB commentary, 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 hovered above the 50-day and 200-day EMAs, sending bullish price signals.
A DAX return to the 18,500 handle could signal a move toward 18,750. A break above 18,750 may bring 19,000 into view.
ECB commentary, economic data, and US politics require consideration.
Conversely, a DAX drop below the 50-day EMA could signal a fall toward 18,000.
The 14-day RSI at 50.58 suggests a DAX break return to the May high of 18,893 before entering overbought territory.
4-Hourly Chart
The DAX sat above the 50-day and 200-day EMAs, affirming the bullish price signals.
A breakout from 18,500 could give the bulls a run at the 18,750 handle.
However, a DAX drop below the 50-day EMA could give the bears a run at the 200-day EMA. A fall through the 200-day EMA would bring 18,000 into view.
The 14-period 4-hour RSI at 49.92 indicates a DAX fall to 18,000 before entering oversold territory.
About the Author
Bob Masonauthor
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.
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