DAX Index Today: Eurozone Inflation Rate, Trade Data, and 18,200

Overview of the DAX Performance on Friday

The DAX slipped by 0.03% on Friday. Following a 0.11% loss on Thursday, the DAX ended the session at 17,937.

China House Price Data and the PBoC Impact Market Risk Sentiment

On Friday, economic data from China and PBoC inaction pressured riskier assets. House prices declined by 1.4% year-on-year in February after falling 0.7% in January. The larger-than-expected fall in house prices raised concerns about the Chinese economy. Real estate accounts for about 20% of the Chinese economy.

A lack of further stimulus contributed to the negative mood. The PBoC left the one-year MLF rate at 2.5%. Economists expected the PBoC to cut the one-year rate to 2.4%.

There were no economic stats for Germany or the Eurozone to influence buyer demand for DAX-listed stocks. However, ECB Chief Economist Philip Lane offered relief amidst rising bets on a June ECB rate cut. The ECB Chief Economist reportedly said,

“We do think the labor market is softening in many ways. Vacancy rates […] are coming down, and firms are no longer as fearful about labor shortages.”

US Michigan Consumer Sentiment Pressured Riskier Assets

On Friday, the Michigan Consumer Sentiment Survey drew investor interest. According to the preliminary survey, the Michigan Consumer Sentiment Index fell from 76.9 to 76.5 in March. Significantly, consumers continued to expect an inflation rate of 3%. Five-year inflation expectations remained at 2.9%, suggesting a sticky inflation environment.

Other stats included NY Empire State Manufacturing and industrial production numbers. A pullback in the NY Empire State Manufacturing Index and a pickup in industrial production sent mixed signals.

While the Friday numbers influenced market risk sentiment, the hotter-than-expected producer prices resonated. Falling bets on an H1 2024 Fed rate cut pushed US Treasury yields higher.

10-year US Treasury yields increased by 0.42%, ending the day at 4.310%. On Friday, the Dow declined by 0.49%. The Nasdaq Composite and S&P 500 saw losses of 0.96% and 0.65%, respectively.

The Friday Market Movers

Vonovia tumbled 10.07% on Friday. The German real estate firm reported its largest-ever loss in 2023, fueling a sell-off. Writedowns on property valuations contributed to a $7.35 billion loss.

Infineon Technologies slid by 6.02%, with SAP down 1.70% on sentiment toward the Fed rate path.

However, auto stocks found much-needed support on Friday. Daimler Truck Holding rallied 2.09%, with Mercedes Benz Group gaining 0.77%. Volkswagen ended the session up 0.74%. Porsche and BMW ended the session up 0.64% and 0.46%, respectively.

Economic Indicators from China to Set the Tone

Economic data from China could set the tone for the Monday session. Retail sales, unemployment, fixed asset investments, and industrial production figures warrant investor attention.

Over January and February, industrial production increased by 7.0.% year-on-year after rising by 6.8% in December. Economists forecast industrial production to advance by 5.0%.

Fixed asset investments increased by 4.2% year-on-year (Jan-Feb) vs. 3.0% in December. Economists forecast a 3.2% increase.

Retail sales rose by 5.5% (Jan-Feb) after increasing by 7.4% year-on-year in December. However, the unemployment rate rose from 5.1% to 5.3% in February. Economists expected retail sales to advance by 5.2% and a 5.1% unemployment rate.

Eurozone Inflation and Trade in Focus

On Monday, economic indicators for the Eurozone will garner investor interest. Finalized inflation figures and trade data will be in focus. Upward revisions to the preliminary inflation numbers could influence investor bets on a June ECB rate cut and pressure the DAX.

According to preliminary numbers, the annual inflation rate eased from 2.8% to 2.6% in February. Core inflation fell from 3.3% to 3.1%.

However, improving trade terms could limit the impact of the inflation numbers. Economists expect the trade surplus to widen from €16.8 billion to €20,0 billion in January. Investors must consider import and export data.

There are no economic indicators from Germany for investors to consider on Monday.

US Housing Sector in the Spotlight

Later in the session, US housing sector data also needs consideration. Economists forecast the NAHB Housing Market Index to remain at 48 in March. The markets consider the US housing sector a litmus test of the US economy. Upward trends in housing sector data could signal a resilient US economy.

However, the numbers will unlikely influence the FOMC monetary policy decision and projections (Wed).

Short-term Forecast

Near-term trends for the DAX will hinge on Eurozone inflation data and the upcoming Fed interest rate decision. Softer-than-expected Eurozone inflation and a more dovish Fed could fuel buyer demand for DAX-listed stocks.

In the futures, the DAX and Nasdaq Mini were up 36 and 63 points, respectively.

DAX Technical Indicators

Daily Chart

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

A break above the March 14 all-time high of 18,039 could prompt bullish momentum towards the 18,200 level.

Economic data from China and Eurozone inflation numbers warrant investor consideration.

However, a drop below the 17,900 handle could signal a fall to the 17,750 handle.

The 14-day RSI at 74.83 shows the DAX in overbought territory. Selling pressure may intensify at the March 14 high of 18,039.

4-Hourly Chart

The DAX remained above its 50-day and 200-day EMAs, supporting bullish price trends.

A DAX break above the all-time high of 18,039 would support a move to the 18,200 handle.

However, a fall through the 17,900 handle could give the bears a run at the 50-day EMA.

The 14-period 4-hour RSI at 59.18 suggests that the DAX could reach the Thursday all-time high of 18,039 before entering overbought territory.