DAX Index Today: Impact of German Producer Prices and US Jobless Claims

The Overview of the DAX Performance

On Wednesday, June 19, the DAX declined by 0.35%. Reversing a 0.35% gain from Tuesday, June 18, the DAX ended the session at 18,068. Can economic indicators from the Euro area and the US refuel buyer demand for DAX-listed stocks?

Government Bond Yields Impact Market Risk Appetite

On Wednesday, June 19, European government bond yields climbed higher, pressuring the DAX Index.

Uncertainty about a July ECB interest rate cut lingered, with recent inflation figures for the Eurozone suggesting a near-term hold on interest rates.

There were no economic indicators from Germany or the Eurozone to influence sentiment toward the ECB interest rate trajectory.

However, investors remained mindful of the snap French General Elections. Until now, ECB President Lagarde has avoided offering a view of the possible effects of the French election on ECB policy goals.

The Wednesday Market Movers

Tech stocks stumbled on the uptrend in government bond yields. Sartorius AG tumbled 14.15%, with Qiagen sliding by 5.62%. Infineon Technologies declined by 3.60%.

Auto stocks had a mixed Wednesday session as investors eye China and a possible retaliation against EU tariffs on electric vehicle imports. Porsche and Volkswagen declined by 0.72% and 0.38%, respectively. However, BMW rallied 1.10%.

Adidas saw no respite as investors continued to respond to the news of an investigation into reports of corruption in China. Adidas ended the session down 0.46%.

The investigation coincides with the EU tariffs on electric vehicles. Will China make an example of Adidas?

After a quieter Wednesday session, with the US markets closed, economic indicators from the Euro area and the US need consideration on Thursday, June 20.

German Producer Prices, Inflation, and the ECB

German producer prices will warrant investor attention on Thursday. A less marked decline in producer prices may signal an improving demand environment. Producers raise prices in an increasing demand environment, passing higher prices onto consumers. Better-than-expected numbers could reduce investor expectations of a Q3 2024 ECB rate cut.

Economists forecast producer prices to fall 2.0% year-on-year in May after a decline of 3.3% in April.

Later in the session, consumer confidence numbers for the Eurozone could also influence the ECB rate path.

Consumer Confidence, Spending, and Inflation

Economists forecast the Eurozone Consumer Confidence Index to increase from -14.3 to -13.6 in June. Upward trends in consumer confidence could fuel consumer spending and demand-driven inflation. A pickup in consumer spending could force the ECB to delay further rate cuts to assess the effects of consumption on inflation.

Any upside could be temporary, with the French Elections like to influence investor sentiment across the region.

However, US economic indicators and the Fed rate path may also influence buyer demand for DAX-listed stocks.

US Jobless Claims and the Fed Rate Path

Later in the session on Thursday, US initial jobless claims and the Philly Fed Manufacturing data will garner investor interest.

Economists forecast initial jobless claims to fall from 242k to 235k in the week ending June 15.

Lower-than-expected jobless claims could temper investor bets on a September Fed rate cut. Tighter labor market conditions may support wage growth and increase disposable income. Higher disposable income could fuel consumer spending and demand-driven inflation.

FOMC Member calls for patience vis-à-vis cutting interest rates may affect buyer demand for riskier assets.

Beyond the labor market, manufacturing sector data will also draw investor attention.

The Philly Fed Manufacturing Index and the US Economy

The Philly Fed Manufacturing Index will attract investor attention. Economists forecast the Index to increase from 4.5 to 5.0 in June.

Hotter-than-expected numbers could support expectations of a soft landing. However, the numbers are unlikely to influence the Fed rate path. Manufacturing accounts for less than 30% of the US economy, with the services sector the main contributor to inflation.

Signals of a robust US economy could drive buyer demand for DAX-listed stocks.

However, investors should monitor FOMC Member speeches. In recent speeches, FOMC Members highlighted the need for more time to see if inflation can sustainably return to target.

Near-Term Outlook

Near-term trends for the DAX will hinge on preliminary private sector PMIs on Friday, central bank chatter, the French elections, and China tariff-related news.

Risk aversion, stemming from the French elections or China, could overshadow sentiment toward the ECB rate path. Nevertheless, softer service sector PMI numbers for the Euro area and the US could drive buyer demand for DAX-listed stocks.

On the Futures markets, the DAX and the Nasdaq mini were up 53 and 96 points, respectively.

DAX Technical Indicators

Daily Chart

The DAX sat below the 50-day EMA while remaining above the 200-day EMA, affirming the bearish near-term but bullish longer-term price signals.

A DAX breakout from the 18,200 handle could give the bulls a run at the 50-day EMA. A move through the 50-day EMA could signal a return to 18,500.

ECB chatter, German wholesale prices, and Eurozone consumer confidence need consideration alongside the US economic calendar.

Conversely, a DAX fall through the 18,000 handle could give the bears a run at the 17,750 handle.

The 14-day RSI at 40.04 indicates a return to the 17,750 handle before entering oversold territory.

4-Hourly Chart

The DAX remained below the 50-day and 200-day EMAs, sending bearish price signals.

A DAX breakout from the 200-day EMA could support a move to the 18,200 handle. A break above the 18,200 handle could give the bulls a run at the 50-day EMA.

However, a DAX drop below the 18,000 handle could bring the 17,615 support level into play.

The 14-period 4-hour RSI at 36.64 indicates a DAX drop to 17,750 before entering oversold territory.