DAX Index Today: Focus on the ECB, French Election News, and Fed Chatter

The Overview of the DAX Performance

On Tuesday, June 18, the DAX gained 0.35%. Following a rise of 0.37% on Monday, June 17, the DAX ended the session at 18,132.

Snap French Election Jitters Eased

Government bond yields slipped on Tuesday as investor jitters about the snap French Election eased.

Investors continued responding to National Rally party leader Marine Le Pen’s assurance that she would not ask Emmanuel Macron to resign.

The DAX slid by 2.99% last week as investors reacted to the snap election announcement and fears over the effects of an anti-immigration government on the EU project.

German Economic Sentiment Disappoints

Economic sentiment figures for Germany tested investor hopes of a sustainable economic recovery. The German ZEW Economic Sentiment Index rose from 47.1 to 47.5 in June. Economists expected an increase to 50.0.

Finalized inflation figures for the Eurozone aligned with preliminary numbers. The annual inflation rate rose from 2.4% to 2.6% in May. Higher inflation rates could reduce investor bets on multiple 2024 ECB rate cuts. A more hawkish ECB rate path would affect buyer demand for DAX-listed stocks.

US Retail Sales Raise Investor Bets on a September Fed Rate Cut

Later in the session on Tuesday, US retail sales figures raised expectations of a September Fed rate cut. Retail sales increased by 0.1% in May after falling by 0.2% in April. Economists forecast a 0.2% rise.

Downward trends in consumer spending could dampen demand-driven inflation and support a September Fed rate cut.

However, FOMC Member speeches limited the upside for the DAX. FOMC Member Susan Collins warned about overbetting on Fed rate cuts.

The hawkish comments limited the upside for the US equity markets.

On Tuesday, the Nasdaq Composite Index gained 0.03%, with the S&P 500 and the Dow advancing by 0.25% and 0.15%, respectively.

The Tuesday Market Movers

Bank stocks extended their gains from Monday, with Deutsche Bank and Commerzbank advancing by 0.12% and 1.51%, respectively.

However, auto stocks had a mixed session amidst lingering concerns about EU tariffs on electric vehicle imports from China. Porsche and Volkswagen saw gains of 0.44% and 0.24%, respectively. BMW fell by 0.57%.

Adidas extended its losses from Monday, falling by 1.41%. An investigation into reports of corruption in China resonated.

ECB Economic Bulletin Pre-Releases and Commentary in Focus

On Wednesday, June 19, the ECB Economic Bulletin pre-releases will be in focus. Views on the Eurozone economic recovery will warrant investor attention as the ECB considers the lackluster post-pandemic recovery relative to US growth.

Investors should also monitor ECB commentary amidst shifting bets on multiple 2024 rate cuts. Comments regarding inflation, the economic outlook, and the timing of interest rate cuts need consideration. Support for a single ECB rate cut could impact buyer demand for DAX-listed stocks.

Beyond the calendars, French Election-related news will warrant investor attention.

US Housing Sector and the Fed

Later in the session on Wednesday, the US NAHB Housing Market Index will draw investor interest. Economists forecast the NAHB Housing Market Index to remain steady at 45 in June.

Economists consider the US housing sector a barometer for the US economy. Improving sector conditions could support consumer confidence and spending. Upward trends in consumer spending may fuel demand-driven inflation and delay Fed rate cuts.

Beyond the numbers, investors should monitor FOMC Member chatter. Support for a single 2024 Fed rate cut would affect market risk appetite.

Near-Term Outlook

Near-term trends for the DAX will hinge on central bank commentary, the French elections, and private sector PMIs (German and US) on Friday. Weaker Euro area and US service sector activity could raise bets on ECB and FED rate cuts and fuel buyer demand for DAX-listed stocks.

However, investors should monitor tariff-related chatter from Beijing and French Election-related news.

On the Futures markets, the DAX was flat, while the Nasdaq mini was up 22 points.

DAX Technical Indicators

Daily Chart

The DAX remained below the 50-day EMA while holding above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

A DAX return to the 18,200 handle would support a move to the 50-day EMA. A break above the 50-day EMA could bring 18,500 into play.

Central bank chatter, ECB Economic Bulletin pre-releases, and US housing sector data require attention.

Conversely, a DAX drop below the 18,000 handle could signal a fall to the 17,750 handle.

The 14-day RSI at 41.60 suggests a fall to the 17,750 handle before entering oversold territory.

4-Hourly Chart

The DAX hovered below the 50-day and 200-day EMAs, confirming the bearish price trends.

A DAX break above the 200-day EMA could give the bulls a run at the 18,250 handle. A return to the 18,250 handle would bring the 50-day EMA into play.

However, a DAX break below 18,000 could signal a fall toward the 17,615 support level.

The 14-period 4-hour RSI at 39.48 suggests a DAX fall to 17,750 before entering oversold territory.