DAX Index Today: Factory Orders and Earnings Reports Set the Stage for Market Moves

Market Overview

On Monday, August 5, the DAX declined by 1.82%. Following a 2.33% slide on Friday, August 2, the DAX ended the session at 17,339.

Monday: DAX Market Movers

• Commerzbank and Deutsche Bank slid by 2.42% and 2.58%, respectively. Lower ECB and Fed interest rates could impact net interest margins.
• Auto stocks extended their losses from Friday. Volkswagen and BMW declined by 3.06% and 2.73%, respectively, on demand concerns.

Euro Area Services Sector

On Monday, August 5, finalized German and Eurozone Services PMI numbers warranted investor interest.

The Eurozone Flash HCOB Services PMI dropped from 52.8 in June to a 4-month low of 51.9 in July, aligned with the Flash 51.9. According to the final survey, input cost inflation accelerated. However, output charges rose at the weakest pace since May 2021.

Hamburg Commercial Bank Chief Economist Dr. Cyrus de la Rubia commented on the finalized numbers, stating,

“There is still no relief from inflation. Sure, sales prices are climbing at the slowest rate in 38 months, and this generally applies to input costs too, but inflation is still pretty high given the weak economy. […]. We think this points to wage pressure caused by demographic shifts, making it harder for the ECB to hit its 2% inflation target.”

German Factory Orders

German factory orders could impact buyer demand for DAX-listed stocks on Tuesday, August 6.

Economists forecast factory orders to increase by 0.8% in June after a fall of 1.6% in May. Another unexpected decline in orders could fuel concerns about a potential German economic recession.

A weakening demand environment could signal another flight to safety and a DAX drop toward 17,000.

Expert Views on the German Economy

Oxford Economics Chief Germany Economist Oliver Rakau commented on the German labor market, stating,

“Obviously super limited data for August, but that labour market resilience may well be over in Germany and the rise in unemployment over the past months could garner pace.”

The resilient labor market has been pivotal to the German economy. Economists now expect a Q3 2024 German recession.

Hamburg Commercial Bank Chief Economist Dr. Cyrus de la Rubia commented on the July Manufacturing PMI survey and Germany’s economy, saying,

“Due to the sharp drop in production and new orders, we’re revising our growth forecast down. […]. We are now expecting the overall economy to grow by just 0.2% this year, down from our previous forecast of 0.5%.”

Corporate Earnings

Bayer and Zalando SE are among the big names releasing earnings reports on Tuesday, August 6. Disappointing results and gloomy outlooks would negatively impact the DAX.

US Economic Data: ISM Services PMI

On Monday, August 5, the ISM Services PMI drew investor interest amid recession fears.

The ISM Services PMI increased from 48.8 in June to 51.4 in July. According to the crucial Services PMI survey, the ISM Employment PMI jumped from 46.1 in June to 51.1 in July, easing fears of a US hard landing.

US Market Trends

On Monday, August 5, the US equity markets extended their losses from Friday, August 2. The Nasdaq Composite Index tumbled by 3.43%, while the Dow and the S&P 500 saw losses of 2.60% and 3.00%, respectively.

Expert Views on the US Economy

Arch Capital Global Chief Economist Parker Ross commented on the ISM Services PMI, saying,

“This morning’s ISM & S&P Global Services PMIs beating expectations was certainly a good first step, but there aren’t many other data releases this week to counter current sentiment on the labor market other than the jobless claims data on Thursday morning.”

US Economic Calendar

The RCM/TIPP Economic Optimism Index will influence market risk sentiment on Tuesday, August 6.

Economists forecast the Index to rise from 44.2 in July to 45.0 in August.

The Index measures consumer sentiment toward the economy, the labor market, inflation, and personal financials. A higher-than-expected Index may signal a pickup in consumer spending, easing recession jitters. Private consumption contributes over 60% to the economy. A reading of 45.0 would be the highest since April 2023.

Near-Term Outlook

Near-term DAX trends hinge on corporate earnings, Germany’s economic data, and US labor market numbers. A weaker demand environment and deteriorating US labor market conditions could signal a DAX drop toward 17,000. Recession fears would likely overshadow sentiment toward more dovish central bank rate paths.

In the futures markets, the DAX and the Nasdaq mini were up by 191 and 378 points, respectively.

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 remained below the 50-day and 200-day EMAs, confirming the bearish price signals.

A breakout from the 200-day EMA and the 17,615 resistance level could give the bulls a run at 18,000. Furthermore, a return to 18,000 could signal a move toward the 50-day EMA.

Corporate earnings, factory orders, and US consumer sentiment require consideration.

Conversely, a DAX drop below the 17,350 could bring the 17,003 support level into play.

The 14-day RSI at 29.84 shows the DAX sitting in oversold territory. Buyer demand could intensify at the 17,003 support level.

4-Hourly Chart

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

A break above the 17,615 resistance level would support a move toward 18,000. A breakout from 18,000 could bring the 50-day and 200-day EMAs into play.

However, a DAX drop below 17,350 could give the bears a run at the 17,003 support level.

The 14-period 4-hour RSI at 23.48 shows the DAX sitting in oversold territory. Buyer pressure could intensify at the 17,003 support level.