DAX Index Today: Futures Signal a New All Time High on Rate Cut Bets

The Overview of the DAX Performance

The DAX rallied 1.02% on Thursday (May 9). Following a 0.37% gain on Wednesday (May 8), the DAX closed the session at 18,687. Significantly, the DAX extended its winning streak to five sessions and struck a new all-time high of 18,699.

Trade Data from China Set the Tone for the Thursday Session

Trade data from China attracted investor interest on Thursday (May 9). Imports jumped 8.4% year-on-year in April, with exports increasing 1.5%. The figures aligned with recent private sector PMI numbers for April. In April, the Caixin Manufacturing PMI increased from 51.1 to 51.4, with demand from overseas hitting an almost three-and-a-half-year high.

A pickup in demand from China could support the ailing German manufacturing sector.

There were no economic indicators for Germany or the Eurozone to consider.

Initial Jobless Claims Revive Hopes of a September Fed Rate Cut

Later in the Thursday session, US initial jobless claims raised investor expectations of a September Fed rate cut. Initial jobless claims increased from 209k to 231k in the week ending May 4.

On Thursday (May 9), the Dow advanced by 0.85%. The Nasdaq Composite Index and S&P 500 saw gains of 0.27% and 0.51%, respectively.

Hawkish Fed commentary capped the upside for the US equity markets. Before considering a rate cut, FOMC member Mary Daly wanted more confidence that inflation is returning to the 2% target.

The Thursday Market Movers

Siemens Energy AG extended its gains from Wednesday, rallying 3.64% after the improved outlook for 2024. Siemens AG advanced by 1.38%.

Tech stocks trended higher, with Infineon Technologies and SAP rising by 2.30% and 0.75%, respectively.

However, the auto sector had a mixed session. Mercedes Benz Group tumbled 5.82%, bucking the broader sector trend.

BMW and Volkswagen rose by 0.49% and 0.17%, respectively. Porsche advanced by 0.87%, with Daimler Truck Holding rallying 2.22%. Trade data from China likely contributed to the gains.

ECB Monetary Policy Meeting Minutes Under the Spotlight

On Friday (May 10), the ECB monetary policy meeting minutes will warrant investor attention. Investors will likely assess views about post-June policy plans amidst rising bets on a June ECB rate cut. Dovish minutes could drive buyer demand for DAX-listed stocks.

Nevertheless, investors should continue to monitor ECB chatter. ECB Executive Board members Frank Elderson and Piero Cipollone are on the calendar to speak.

Comments regarding inflation, the economic outlook, and interest rate cuts need consideration.

US Economic Calendar: Michigan Consumer Sentiment and Fed Speakers

Later in the Friday session, Michigan Consumer Sentiment numbers will attract investor interest.

Economists forecast the Michigan Consumer Sentiment Index to fall from 77.2 to 76.0 in May. Weaker consumer sentiment could impact consumer spending and dampen demand-driven inflation. A softer inflation outlook could allow the Fed to begin discussing an interest rate cut.

However, investors should monitor FOMC member commentary. FOMC members Michelle Bowman and Austan Goolsbee are on the calendar to speak. Support for a higher-for-longer Fed rate path could influence market risk sentiment.

Near-Term Outlook

Near-term trends for the DAX will hinge on the ECB minutes, US consumer sentiment numbers, and central bank chatter. Dovish ECB minutes, weaker US consumer sentiment, and ECB support for multiple 2024 rate cuts could drive buyer demand for DAX-listed stocks. However, FOMC member chatter will also influence near-term trends.

On the Futures markets, the DAX and the Nasdaq mini were up by 36 and 5 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX break above the Thursday (May 9) all-time high of 18,699 would support a move toward 18,850.

The ECB minutes, ECB Executive Board member commentary, US consumer sentiment numbers, and Fed speakers need consideration.

However, a break below 18,650 could signal a fall through the 18,500 level. A drop below 18,500 would bring the 18,350 handle into play.

The 14-day RSI at 67.58 indicates a DAX move to 18,850 before entering overbought territory.

4-Hourly Chart

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

A DAX break above the all-time high of 18,699 could give the bulls a run at 18,850.

Conversely, a DAX drop below the 18,650 handle would bring the 18,500 handle into play.

The 14-period 4-hour RSI at 78.59 shows the DAX in overbought territory. Selling pressure could intensify at the 18,700 level.