DAX Index Today: German Inflation and US CPI Reports Key to Dax Market Movements

DAX Surges Amid Fed Rate Cut Speculations – Will It Continue?

On Wednesday, July 10, the DAX advanced by 0.94%. Partially reversing a 1.28% slide from Tuesday, July 9, the DAX closed the day at 18,407.

The Wednesday Market Movers

Auto stocks were front-runners on Wednesday. BMW rallied 2.05% because of strong sales in the first half of the year. Mercedes Benz Group gained 1.27%, while Porsche advanced by 0.23%.

Increased bets on a September Fed rate cut drove demand for tech stocks. Infineon Technologies advanced by 1.19%, while SAP rose by 0.56%.

On Wednesday, there were no economic indicators from Germany or the Euro area. However, inflation will be the focal point on Thursday.

Can German inflation numbers fuel investor expectations of a Q3 2024 ECB rate cut?

German Inflation Under the Spotlight

On Thursday, finalized German inflation numbers for June will draw investor scrutiny.

According to the preliminary report, the annual inflation rate fell from 2.4% in May to 2.2% in June. A downward revision to the preliminary inflation number could bolster the case for a Q3 2024 ECB rate cut. Stronger bets on an ECB rate cut could boost buyer demand for DAX-listed stocks.

Can the German and US inflation figures send the DAX to 19,000?

Fed Chair Powell and Fed Rate Cut Bets Fuel the Rebound

On Wednesday, Fed Chair Powell reiterated that the US economy is returning to the Fed’s 2% inflation target. Powell also signaled a cooling US labor market, fueling speculation about a September Fed rate cut.

Investors reacted positively to Powell’s second day of testimony. The Nasdaq Composite Index rallied 1.18%. The Dow and the S&P 500 gained 1.09% and 1.02%, respectively.

Wall Street Journal Chief Economics Correspondent Nick Timiraos commented on Powell’s testimony, stating,

“It didn’t move markets. It was “boring” in the words of one lawmaker. But the Fed chair’s testimony on Capitol Hill this week laid the groundwork for rate cuts using what may turn out to be a more durable footing than the one that collapsed in April.”

Powell’s testimony came before crucial US inflation numbers due on Thursday, July 11.

Is the DAX at risk of a sell-off with US inflation in focus?

US CPI Report Pivotal for Fed Rate Cut Bets and the DAX

On Thursday, the US CPI Report could dictate investor bets on a September Fed rate cut.

Economists forecast US core inflation to remain at 3.4% in June. Additionally, economists expect the annual inflation rate to fall from 3.3% in May to 3.1% in June.

Softer-than-expected numbers may raise investor bets on a September Fed rate cut and boost demand for DAX-listed stocks. Conversely, an unexpected rise in inflation could end expectations of a 2024 Fed rate cut and impact demand for riskier assets.

Other US stats include jobless claims data. A marked increase in jobless claims could support the case for a September Fed rate cut. Nevertheless, the US CPI Report will influence market risk sentiment more. The Fed is not likely to cut interest rates if consumer price inflation is higher.

Near-Term Outlook

Near-term trends for the DAX will depend on inflation numbers. Lower-than-expected inflation numbers from Germany and the US could raise investor bets on Q3 2024 ECB and Fed rate cuts. More dovish rate paths could signal a DAX return to 19,000.

On the Futures markets, the DAX was up by 26 points, while the Nasdaq mini declined by 17 points.

Investors should remain alert, with inflation in the spotlight. Monitor the news wires, real-time economic data, and expert commentary to manage trading strategies accordingly. Stay informed with our latest updates and insights to navigate the equity markets.

DAX Technical Indicators

Daily Chart

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

A DAX return to the 18,500 handle could support a move toward the 18,750 handle.

German and US inflation numbers require consideration on Thursday.

Conversely, a DAX drop below the 50-day EMA could give the bears a run at 18,000. A fall through 18,000 could bring the 17,615 support level into play.

The 14-day RSI at 52.36 suggests a rise to the 18,750 handle before entering overbought territory.

4-Hourly Chart

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

A breakout from 18,500 could bring the 18,750 handle into play.

However, a DAX break below the 50-day and 200-day EMAs could signal a drop to the 18,000 handle.

The 14-period 4-hour RSI at 54.01 suggests a DAX return to 18,750 before entering overbought territory.