DAX Index Today: German Inflation and Earnings Set to Influence DAX Performance

Market Overview

On Friday, August 9, the DAX gained 0.24%, closing at 17,723 after an increase of 0.37% on Thursday. Significantly, the DAX extended its winning streak to four sessions.

Friday: DAX Market Movers

• Rheinmetall AG led the way, surging by 5.24% on record orders, higher profits, and a positive outlook.
• Auto stocks limited the upside for the DAX over demand concerns. Daimler Truck Holding declined by 0.42%, while Mercedes Benz Group fell by 0.40%.

German Inflation Ticks Higher

Germany’s annual inflation rate rose from 2.2% in June to 2.3% in July, testing investor bets on multiple 2024 ECB rate cuts. Services inflation, an ECB focal point, pushed inflation higher.

A less dovish ECB rate path could raise borrowing costs, possibly impacting company profits and stock price trends.

German Wholesale Prices

On Monday, August 12, German wholesale prices will draw investor interest. Economists forecast wholesale prices will decline by 0.4% in July year-on-year after a 0.6% fall in June.

A higher-than-expected figure could signal an improving demand environment. Wholesalers increase prices in a rising demand environment, passing costs on to consumers. Rising consumer prices could temper bets on multiple 2024 ECB rate cuts.

A less dovish ECB rate path may impact buyer demand for DAX-listed stocks.

Expert Views on the German Inflation and the Economy

Federal Statistical Office (Destatis) President Ruth Brand remarked on Germany’s inflation report, saying,

“The price declines for energy in particular are dampening the inflation rate. In contrast, we continue to observe above-average price increases for services.”

Bloomberg Western Europe Economic Team Leader Zoe Schneeweiss shared a Bloomberg article reporting economists predicting the German economy will expand by just 0.1% in 2024.

Sticky inflation and a weakening macroeconomic environment could heighten monetary policy uncertainty.

Corporate Earnings

Porsche will release its earnings results on Monday, possibly influencing the broader auto sector before the US session.

US Market Trends

On Friday, August 9, the US equity markets extended their gains from the Thursday session. The Nasdaq Composite Index and S&P 500 advanced by 0.51% and 0.47%, respectively, while the Dow gained 0.13%.

Easing fears of a marked deterioration in the US labor market and a hard US landing drove demand for riskier assets.

US Economic Calendar

On Monday, US consumer inflation expectations will draw investor interest.

Economists forecast consumer inflation expectations to remain unchanged at 3.0% in July. An unexpected fall could support investor bets on multiple Fed rate cuts and buyer demand for riskier assets.

However, a sharp decline could signal a pullback in consumer spending that may adversely impact the US economy. Consumers could curb spending plans if they expect prices to fall sharply. Private consumption contributes over 60% to GDP, exposing the US economy to consumer spending trends.

Expert Views on US Inflation and the Fed Rate Path

FOMC voting member Michelle Bowman shared her views on inflation and the Fed rate path on Saturday, August 10, saying,

“Should the incoming data continue to show that inflation is moving sustainably toward our 2% goal, it will become appropriate to gradually lower the federal funds rate. But we need to be patient and avoid undermining continued progress on lowering inflation by overreacting to any single data point.”

Her support for an interest rate cut could boost buyer demand for DAX-listed stocks.

Near-Term Outlook

Near-term DAX trends will hinge on corporate earnings, US inflation numbers (Wed), US labor market data (Thurs), and central bank commentary. Softer-than-expected US inflation data could fuel expectations of multiple Fed rate cuts.

However, an unexpected spike in US jobless claims could rekindle investor fears of a hard US landing. The threat of a hard landing could force the Fed to cut rates more aggressively.

Additionally, investors should track USD/JPY trends, as a drop below 145 could trigger fears of another Yen carry trade unwind.

In the futures markets, the DAX and the Nasdaq Mini were up by 85 and 33 points, respectively.

Investors should stay alert with corporate earnings and inflation 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 held above the 200-day EMA while sitting well below the 50-day EMA, sending bearish near-term but bullish longer-term price signals.

A return to 18,000 could give the bulls a run at the 50-day EMA. A breakout from the 50-day EMA could signal a move toward 18,500.

Corporate earnings, leading inflation indicators, and central bank commentary require consideration.

Conversely, a DAX drop below the 17,615 support level and the 200-day EMA could signal a fall toward the 17,003 support level.

The 14-day RSI at 40.90 indicates a DAX fall to the 17,003 support level before entering oversold territory.

4-Hourly Chart

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

A breakout from the 50-day EMA could give the bulls a run at the 200-day EMA.

However, a DAX drop below the 17,615 support level could bring the 17,003 support level into play.

The 14-period 4-hour RSI at 46.38 suggests a DAX fall to the 17,003 support level before entering oversold territory.